What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-11-08 compared with 2022-11-17 · 367 added, 459 removed, 1219 unchanged (40% of the section changed)

31 unchanged sentences

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of

Helmerich & Payne, Inc.

The Board of Directors and Shareholders of Helmerich & Payne, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Helmerich & Payne, Inc.’s internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Helmerich & Payne, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended September 30, 2023, and the related notes and our report dated November 8, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Tulsa, Oklahoma

November 8, 2023

2023 FORM 10-K | 56

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Helmerich & Payne, Inc.

Opinion on the Financial Statements

15 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

4 unchanged sentences

The Company's self-insurance liability for workers’ compensation and other casualty claims was $77.3 million at September 30, 2023.

As described in Note 2—Summary of Significant Accounting Policies, Risks and Uncertainties to the Consolidated Financial Statements, this liability is based on a third-party actuarial analysis, which includes an estimate for incurred but not reported claims.

As described in Note 2 to the consolidated financial statements, this liability is based on a third-party actuarial analysis, which includes an estimate for incurred but not reported claims.

The actuarial analysis considers a variety of factors, including third-party adjusters’ estimates, historic experience, and statistical methods commonly used within the insurance industry.

11 unchanged sentences

2023 FORM 10-K | 58

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of

HELMERICH & PAYNE, INC.

Opinion on Internal Control over Financial Reporting

We have audited Helmerich & Payne, Inc.’s internal control over financial reporting as of September 30, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Helmerich & Payne, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended September 30, 2022, and the related notes and our report dated November 16, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

/s/ Ernst & Young LLP

Tulsa, Oklahoma

November 16, 2022

2022 FORM 10-K | 58

HELMERICH & PAYNE, INC.

CONSOLIDATED BALANCE SHEETS

24 unchanged sentences

Dividends payable 25,194 26,693

Current portion of long-term debt, net — 483,486

Accrued liabilities 262,885 241,151

4 unchanged sentences

Other 128,129 114,927

Noncurrent liabilities - discontinued operations 1,540 2,013

Total noncurrent liabilities 1,191,082 1,195,249

32 unchanged sentences

2,310,532 2,013,652 1,647,117

OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS 45,292 ( 428,549 ) ( 620,187 )

OPERATING INCOME (LOSS) 561,889 45,292 ( 428,549 )

Other income (expense)

1 unchanged sentence

Interest expense ( 17,283 ) ( 19,203 ) ( 23,955 )

Gain (loss) on investment securities 57,937 6,727 ( 8,720 )

Gain on sale of subsidiary — — 14,963

Gain on investment securities 11,299 57,937 6,727

Loss on extinguishment of debt — ( 60,083 ) —

1 unchanged sentence

31,490 ( 13,973 ) ( 1,322 )

Income (loss) from continuing operations before income taxes 30,918 ( 441,180 ) ( 636,498 )

Income (loss) before income taxes 593,379 31,319 ( 429,871 )

Income tax expense (benefit) 159,279 24,366 ( 103,721 )

Income (loss) from continuing operations 6,552 ( 337,459 ) ( 496,392 )

Income from discontinued operations before income taxes 401 11,309 30,580

Income tax provision — — 28,685

Income from discontinued operations 401 11,309 1,895

NET INCOME (LOSS) $ 434,100 $ 6,953 $ ( 326,150 )

Basic earnings (loss) per common share $ 4.18 $ 0.05 $ ( 3.04 )

Income (loss) from continuing operations $ 0.05 $ ( 3.14 ) $ ( 4.62 )

Income from discontinued operations — 0.10 0.02

Net income (loss) $ 0.05 $ ( 3.04 ) $ ( 4.60 )

Diluted earnings (loss) per common share $ 4.16 $ 0.05 $ ( 3.04 )

Income (loss) from continuing operations $ 0.05 $ ( 3.14 ) $ ( 4.62 )

Income from discontinued operations — 0.10 0.02

Net income (loss) $ 0.05 $ ( 3.04 ) $ ( 4.60 )

Weighted average shares outstanding:

9 unchanged sentences

Other comprehensive income, net of income taxes:

Net change related to employee benefit plans, net of income taxes of $ 2.3 million at September 30, 2022, $ 1.8 million at September 30, 2021 and $ 0.8 million at September 30, 2020

Net change related to employee benefit plans, net of income taxes of $ 1.2 million, $ 2.3 million, and $ 1.8 million at September 30, 2023, 2022, and 2021, respectively.

4,091 8,172 5,944

17 unchanged sentences

— — — ( 109,236 ) — — — ( 109,236 )

Exercise of employee stock options, net of shares withheld for employee taxes — — ( 3,151 ) — — ( 110 ) 7,195 4,044

Vesting of restricted stock awards, net of shares withheld for employee taxes 71 7 ( 18,683 ) — — ( 339 ) 16,515 ( 2,161 )

Stock-based compensation — — 27,858 — — — — 27,858

Share repurchases — — — — — 1,460 ( 28,505 ) ( 28,505 )

Cumulative effect adjustment for adoption of ASU No.

2016-13 — — — ( 1,251 ) — — — ( 1,251 )

Other — — ( 900 ) — — — — ( 900 )

Balance at September 30, 2021

112,222 $ 11,222 $ 529,903 $ 2,573,375 $ ( 20,244 ) 4,324 $ ( 181,638 ) $ 2,912,618

Comprehensive income (loss):

Net loss — — — ( 326,150 ) — — — ( 326,150 )

Comprehensive income:

Net income — — — 6,953 — — — 6,953

Other comprehensive income — — — — 8,172 — — 8,172

3 unchanged sentences

Stock-based compensation — — 28,032 — — — — 28,032

Cumulative effect adjustment for adoption of ASU No.

2016-13 — — — ( 1,251 ) — — — ( 1,251 )

Share repurchases — — — — — 3,155 ( 76,999 ) ( 76,999 )

Other — — ( 1,049 ) — — — — ( 1,049 )

4 unchanged sentences

Other comprehensive income — — — — 4,091 — — 4,091

Dividends declared ($ 1.00 per share)

Dividends declared ($ 1.00 base per share, $ 0.940 supplemental per share)

— — — ( 199,957 ) — — — ( 199,957 )

13 unchanged sentences

Net income (loss) 434,100 6,953 ( 326,150 )

Adjustment for income from discontinued operations ( 401 ) ( 11,309 ) ( 1,895 )

Income (loss) from continuing operations 6,552 ( 337,459 ) ( 496,392 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

3 unchanged sentences

Loss on extinguishment of debt — 60,083 —

Provision for credit loss 1,081 203 2,203

Stock-based compensation 32,456 28,032 27,858

Loss (gain) on investment securities ( 57,937 ) ( 6,727 ) 8,720

Gain on investment securities ( 11,299 ) ( 57,937 ) ( 6,727 )

Gain on reimbursement of drilling equipment ( 48,173 ) ( 29,443 ) ( 12,322 )

Other (gain) loss on sale of assets 8,016 ( 5,432 ) 11,280

Gain on sale of subsidiary — — ( 14,963 )

Deferred income tax benefit ( 20,400 ) ( 28,488 ) ( 89,752 )

9 unchanged sentences

Other noncurrent liabilities 5,590 ( 22,501 ) ( 1,274 )

Net cash provided by operating activities from continuing operations 233,986 136,488 538,928

Net cash used in operating activities from discontinued operations ( 73 ) ( 48 ) ( 47 )

Net cash provided by operating activities 833,682 233,913 136,440

6 unchanged sentences

Proceeds from sale of long-term investments — 22,042 —

Proceeds from sale of subsidiary — — 15,056

Proceeds from asset sales 70,085 62,304 43,515

Insurance proceeds from involuntary conversion 9,221 — —

Advance payment for sale of property, plant and equipment — — 86,524

5 unchanged sentences

Debt issuance costs — — ( 3,935 )

Proceeds from stock option exercises — — 4,100

Payments for employee taxes on net settlement of equity awards ( 14,410 ) ( 5,505 ) ( 2,162 )

15 unchanged sentences

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period:

Cash paid (received) during the period:

Interest paid $ 17,099 $ 18,909 $ 26,706

Income tax paid (received), net 17,669 ( 32,462 ) 46,700

Income tax paid 199,139 17,731 1,456

Income tax received ( 26,809 ) ( 62 ) ( 33,918 )

Cash paid for amounts included in the measurement of lease liabilities:

15 unchanged sentences

Our real estate operations, our incubator program for new research and development projects and our wholly-owned captive insurance companies are included in "Other." Refer to Note 16—Business Segments and Geographic Information for further details on our reportable segments.

Our North America Solutions operations are primarily located in Texas, but traditionally also operate in other states, depending on demand.

Our North America Solutions operations are primarily located in Texas, but also traditionally operate in other states, depending on demand.

Such states include:

1 unchanged sentence

Additionally, Offshore Gulf of Mexico operations are conducted in Louisiana and in U.S.

federal waters in the Gulf of Mexico and our International Solutions operations have rigs and/or services primarily located in four international locations:

Argentina, Bahrain, Colombia and United Arab Emirates.

federal waters in the Gulf of Mexico and our International Solutions operations have rigs and/or services primarily located in five international locations:

Argentina, Bahrain, Colombia, the United Arab Emirates, and Australia.

Our operations in Australia commenced in the fourth fiscal quarter of 2023.

We also own and operate a limited number of commercial real estate properties located in Tulsa, Oklahoma.

Our real estate investments include a shopping center and undeveloped real estate.

Fiscal Year 2020 Dispositions

In December 2019, we closed on the sale of a wholly-owned subsidiary of Helmerich & Payne International Drilling Co.

("HPIDC"), TerraVici Drilling Solutions, Inc.

("TerraVici").

As a result of the sale, 100 % of TerraVici's outstanding capital stock was transferred to the purchaser in exchange for approximately $ 15.1 million, resulting in a total gain on the sale of TerraVici of approximately $ 15.0 million.

Prior to the sale, TerraVici was a component of the North America Solutions operating segment.

This transaction did not represent a strategic shift in our operations and will not have a significant effect on our operations and financial results going forward.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, RISKS AND UNCERTAINTIES

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, RELATED RISKS AND UNCERTAINTIES

Basis of Presentation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

We classified our former Venezuelan operation as a discontinued operation in the third quarter of fiscal year 2010, as more fully described in Note 3—Discontinued Operations.

Unless indicated otherwise, the information in the Notes to Consolidated Financial Statements relates only to our continuing operations.

Prior to the fiscal year ended September 30, 2023, Income from discontinued operations was presented as a separate line item on our Consolidated Statements of Operations.

To conform with the current fiscal year presentation, we reclassified amounts previously presented in Income from discontinued operations, which were not material, to Other within Other income (expense) on our Consolidated Statements of Operations for the years ended September 30, 2022 and September 30, 2021.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Helmerich & Payne, Inc.

and its domestic and foreign subsidiaries.

The Consolidated Financial Statements include the accounts of H&P and its domestic and foreign subsidiaries.

Consolidation of a subsidiary begins when the Company gains control over the subsidiary and ceases when the Company loses control of the subsidiary.

6 unchanged sentences

Aggregate foreign currency losses of $ 6.4 million, $ 5.9 million and $ 5.3 million in fiscal years 2023, 2022 and 2021, respectively, are included in drilling services operating expenses.

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Use of Estimates

2 unchanged sentences

Actual results could differ from those estimates.

2023 FORM 10-K | 65

Cash, Cash Equivalents, and Restricted Cash

4 unchanged sentences

The restricted amounts are primarily invested in short-term money market securities.

Cash, cash equivalents, and restricted cash are reflected in the Consolidated Balance Sheets as follows:

Cash, cash equivalents, and restricted cash are reflected on the Consolidated Balance Sheets as follows:

September 30,

5 unchanged sentences

Total cash, cash equivalents, and restricted cash $ 316,238 $ 269,009 $ 936,716

During the fiscal year ended September, 30, 2022, and to conform with the current year presentation, we reclassified $ 18.4 million and $ 45.6 million of restricted cash that was previously included in Prepaid expenses and other in our Consolidated Balance Sheets as of September 30, 2021 and 2020, respectively.

Accounts Receivable

11 unchanged sentences

The reserves for excess and obsolete inventory were $ 22.4 million and $ 28.0 million for fiscal years 2023 and 2022, respectively.

We maintain investments in equity and debt securities of certain publicly traded and private companies.

We maintain strategic investments in equity and debt securities of certain publicly traded and private companies together with short-term investments to manage liquidity in U.S.

government, federal agency and corporate debt securities.

We recognize our equity securities that have readily determinable fair values at fair value, with changes in such values reflected in net income.

Our equity securities without readily determinable fair values are measured at cost, less any impairments.

Our equity securities without readily determinable fair values are measured at cost, less any impairments and marked to fair value once observable changes in identical or similar investments from the same issuer occur.

Debt securities classified as available-for-sale are reported at fair value and subject to impairment testing.

1 unchanged sentence

Upon sale, realized gains/losses are reported in net income.

Related Party Transactions

In October 2022, we made a $ 14.1 million equity investment, representing 106.0 million common shares in Tamboran Resources Limited, a publicly traded company on the Australian Securities Exchange Ltd under the ticker "TBN." Tamboran is focused on playing a constructive role in the global energy transition towards a lower carbon future, by developing a significantly low CO 2 gas resource within Australia's Beetaloo Sub-basin.

Refer to Note 12—Fair Value Measurement of Financial Instruments for additional information related to our investment.

2023 FORM 10-K | 66

Concurrent with the investment agreement, we entered into a fixed-term drilling services agreement with the same investee.

During the fourth fiscal quarter of 2023, drilling services commenced.

As of September 30, 2023, we recorded $ 2.8 million in receivables, $ 8.0 million in other assets, and $ 6.6 million as a contract liability on our Consolidated Balance Sheets and $ 3.4 million in revenue on our Consolidated Statement of Operations during the fiscal year ended September 30, 2023 related to the drilling services agreement with Tamboran.

We expect to earn $ 37.0 million in revenue over the term of the contract, and, as such, this amount is included within our contract backlog as of September 30, 2023.

Property, Plant, and Equipment

26 unchanged sentences

Early termination revenue for fiscal years 2023, 2022 and 2021 was approximately $ 2.3 million, $ 0.7 million and $ 7.7 million, respectively.

Rent Revenues and Related Property

We enter into leases with tenants in our rental properties consisting primarily of retail space.

The lease terms of tenants occupying space in the retail centers generally range from three to ten years .

Minimum rents are recognized on a straight-line basis over the term of the related leases.

Overage and percentage rents are based on tenants’ sales volume.

Recoveries from tenants for property taxes and operating expenses are recognized in other operating revenues in the Consolidated Statements of Operations.

2022 FORM 10-K | 67

Our rent revenues are as follows:

Year Ended September 30,

(in thousands) 2022 2021 2020

Minimum rents $ 6,362 $ 5,589 $ 9,245

Overage and percentage rents 773 726 656

At September 30, 2022, minimum future rental income to be received on noncancellable operating leases was as follows:

Fiscal Year Amount

(in thousands)

Thereafter 2,241

Total $ 20,102

Leasehold improvement allowances are capitalized and amortized over the lease term.

At September 30, 2022 and 2021, the cost and accumulated depreciation for real estate properties were as follows:

September 30,

(in thousands) 2022 2021

Real estate properties $ 45,557 $ 43,302

Accumulated depreciation ( 30,510 ) ( 28,846 )

$ 15,047 $ 14,456

Current income tax expense is the amount of income taxes expected to be payable for the current fiscal year.

Deferred income taxes are computed using the liability method and are provided on all temporary differences between the financial basis and the tax basis of our assets and liabilities.

2023 FORM 10-K | 67

We take tax positions in our tax returns from time to time that may not ultimately be allowed by the relevant taxing authority.

7 unchanged sentences

Basic earnings per share is computed utilizing the two-class method and is calculated based on the weighted-average number of common shares outstanding during the periods presented.

Diluted earnings per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for stock options, nonvested restricted stock and performance share units.

Diluted earnings per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for nonvested restricted stock and performance share units.

We have granted and expect to continue to grant to employees restricted stock grants that contain non-forfeitable rights to dividends.

7 unchanged sentences

Our key assumptions in the method include the price and the expected volatility of our stock and our self-determined peer group of companies’ (the "Peer Group") stock, risk free rate of return, dividend yields and cross-correlations between the Company and our Peer Group.

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Stock-based compensation is recognized on a straight-line basis over the requisite service periods of the stock awards, which is generally the vesting period.

5 unchanged sentences

Treasury stock may be issued under the Helmerich & Payne, Inc.

2020 Omnibus Incentive Plan.

Amended and Restated 2020 Omnibus Incentive Plan.

Comprehensive Income or Loss

8 unchanged sentences

The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis for finance type leases.

2023 FORM 10-K | 68

Assets and liabilities arising from a lease are initially measured on a present value basis.

18 unchanged sentences

Refer to Note 4—Leases for additional information regarding our leases.

2022 FORM 10-K | 69

Recently Issued Accounting Updates

3 unchanged sentences

ASUs not listed below were assessed and determined to be either not applicable, clarifications of ASUs listed below, immaterial, or already adopted by the Company.

The following table provides a brief description of a recently adopted accounting pronouncement and our analysis of the effects on our financial statements:

2023 FORM 10-K | 69

The following table provides a brief description of recently adopted accounting pronouncements and our analysis of the effects on our financial statements:

Standard Description Date of

2 unchanged sentences

Recently Adopted Accounting Pronouncements

2019-12, Financial Instruments – Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes This ASU simplifies the accounting for income taxes by removing certain exceptions related to Topic 740.

The ASU also improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

This update is effective for annual and interim periods beginning after December 15, 2020.

Early adoption of the amendment is permitted, including adoption in any interim period for public entities for periods for which financial statements have not yet been issued.

An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period.

Additionally, an entity that elects early adoption must adopt all the amendments in the same period.

Upon adoption, the amendments addressed in this ASU will be applied either prospectively, retrospectively or on a modified retrospective basis through a cumulative effect adjustment to retained earnings.

This update is effective for annual periods beginning after December 15, 2020.

October 1, 2021 We adopted this ASU, as required, during the first quarter of fiscal year 2022.

The adoption did not have a material effect on our Consolidated Financial Statements and disclosures.

Standards that are not yet adopted as of September 30, 2022

2020-06, Debt with conversion and other options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s own equity (subtopic 815-40):

3 unchanged sentences

This update is effective for annual and interim periods beginning after December 15, 2021.

Early adoption of the amendment is permitted.

October 1, 2022 We plan to adopt this ASU, as required, during the first quarter of fiscal year 2023.

We do not believe the adoption will have a material effect on our Consolidated Financial Statements and disclosures.

October 1, 2022 We adopted this ASU, as required, during the first quarter of fiscal year 2023.

The adoption did not have a material effect on our Consolidated Financial Statements and disclosures.

2022-03, Fair Value Measurement (Topic 820):

4 unchanged sentences

This update is effective for annual and interim periods beginning after December 15, 2023.

Early adoption of the amendment is permitted for both interim and annual financial statements.

October 1, 2022 We plan to early adopt this ASU during the first quarter of fiscal year 2023.

We do not believe the adoption will have a material effect on our Consolidated Financial Statements and disclosures.

2022 FORM 10-K | 70

October 1, 2022 We early adopted this ASU during the first quarter of fiscal year 2023.

The adoption did not have a material effect on our Consolidated Financial Statements and disclosures.

Allowance for Credit Losses

On October 1, 2020, we adopted ASU 2016-13 on a modified retrospective basis through a cumulative-effect adjustment without restating comparative periods, as permitted under the adoption provisions.

Upon adoption, we recognized a $ 1.6 million increase to our allowance for credit losses and a corresponding cumulative adjustment to reduce retained earnings, net of income taxes, of $ 1.3 million.

This transition adjustment reflects the development of our models to estimate expected credit losses over the life of our financial assets, which primarily consist of our accounts receivable.

Pursuant to ASU 2016-13, we have evaluated our customers’ financial strength and liquidity based on aging of accounts receivable, payment history, and other relevant information, including ratings agency, credit ratings and alerts, and publicly available reports.

We establish an allowance for credit losses of our financial assets, which consists primarily of our accounts receivable, through a review of several factors, including historical collection experience, current aging status of the customer accounts, and current financial strength and liquidity of our customers.

We review relevant information from the ratings agency, credit ratings and alerts, and publicly available reports.

Losses are charged against the allowance when the customer accounts are determined to be uncollectible.

Concentration of Credit Risk

6 unchanged sentences

International sales also present various risks including governmental activities that may limit or disrupt markets and restrict the movement of funds.

Most of our international sales, however, are to large international or government-owned national oil companies.

Most of our international sales, however, are to large international, majority state-owned, or government-owned national oil companies.

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Volatility of Market

9 unchanged sentences

Self-Insurance

We have accrued a liability for estimated workers’ compensation and other casualty claims incurred based upon case reserves plus an estimate of loss development and incurred but not reported claims.

The estimate is based upon historical trends.

Insurance recoveries related to such liability are recorded when considered probable.

We self-insure a significant portion of expected losses relating to workers’ compensation, general liability and automobile liability.

3 unchanged sentences

Estimates are based on adjusters’ estimates, historical experience and statistical methods commonly used within the insurance industry that we believe are reliable.

Insurance recoveries related to such liabilities are recorded when considered probable.

We have also engaged a third-party actuary to perform a review of our casualty losses as well as losses in our captive insurance companies.

1 unchanged sentence

Unanticipated changes in these factors may produce materially different amounts of expense that would be reported under these programs.

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On October 1, 2019, we elected to capitalize a new Captive insurance company to insure the deductibles for our domestic workers’ compensation, general liability and automobile liability claims programs, and to continue the practice of insuring deductibles from the Company's international casualty and rig property programs.

Casualty claims occurring prior to October 1, 2019 will remain recorded within each of the operating segments and future adjustments to these claims will continue to be reflected within the operating segments.

Reserves for legacy claims occurring prior to October 1, 2019, will remain as liabilities in our operating segments until they have been resolved.

Changes in those reserves will be reflected in segment earnings as they occur.

We will continue to utilize the Captives to finance the risk of loss to equipment and rig property assets.

The Company and the Captives maintain excess property and casualty reinsurance programs with third-party insurers in an effort to limit the financial impact of significant events covered under these programs.

The Company also self-insures employee health plan exposures in excess of employee deductibles.

This program is also reviewed at the end of each policy year by a third-party actuary.

We continue to use our Captive insurance companies to insure the deductibles for our domestic workers’ compensation, general liability, automobile liability claims programs, and medical stop-loss program and to insure the deductibles from the Company's international casualty and property programs.

Our operating subsidiaries are paying premiums to the Captives, typically on a monthly basis, for the estimated losses based on an external actuarial analysis.

3 unchanged sentences

Intercompany premium revenues recorded by the Captives during the fiscal years ended September 30, 2023, 2022, and 2021 amounted to $ 67.4 million, $ 57.0 million, and $ 35.4 million, respectively, which were eliminated upon consolidation.

These intercompany insurance premiums are reflected as segment operating expenses within the North America Solutions, Offshore Gulf of Mexico, and International Solutions reportable operating segments and are reflected as intersegment sales within "Other." The Company self-insures employee health plan exposures in excess of employee deductibles.

Starting in the second quarter of fiscal year 2020, the Captive insurer issued a stop-loss program that will reimburse the Company's health plan for claims that exceed $ 50,000 .

This program is reviewed at the end of each policy year by an outside actuary.

Our medical stop loss operating expenses for the fiscal year ended September 30, 2022, 2021, and 2020 were $ 11.8 million, $ 12.0 million, and $ 8.0 million respectively.

These intercompany insurance premiums are reflected as segment operating expenses within the North America Solutions, Offshore Gulf of Mexico, and International Solutions reportable operating segments and are reflected as intersegment sales within "Other." Our medical stop loss operating expenses for the fiscal year ended September 30, 2023, 2022, and 2021 were $ 10.6 million, $ 11.8 million, and $ 12.0 million, respectively.

International Solutions Drilling Risks

2 unchanged sentences

Also, the success of our International Solutions operations will be subject to numerous contingencies, some of which are beyond management’s control.

These contingencies include general and regional economic conditions, fluctuations in currency exchange rates, modified exchange controls, changes in international regulatory requirements and international employment issues, risk of expropriation of real and personal property and the burden of complying with foreign laws.

These contingencies include general and regional economic conditions, geopolitical developments and tensions, war and uncertainty in oil producing countries, fluctuations in currency exchange rates, modified exchange controls, changes in international regulatory requirements and international employment issues, risk of expropriation of real and personal property and the burden of complying with foreign laws.

Additionally, in the event that extended labor strikes occur or a country experiences significant political, economic or social instability, we could experience shortages in labor and/or material and supplies necessary to operate some of our drilling rigs, thereby potentially causing an adverse material effect on our business, financial condition and results of operations.

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We have also experienced certain risks specific to our Argentine operations.

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dollars with gains and losses resulting from foreign currency transactions included in current results of operations.

We recorded aggregate foreign currency losses of $ 5.9 million, $ 5.3 million, and $ 8.8 million the fiscal years ended September 30, 2022, 2021, and 2020 respectively.

We recorded aggregate foreign currency losses of $ 6.4 million, $ 5.9 million, and $ 5.3 million during the fiscal years ended September 30, 2023, 2022, and 2021 respectively.

The Central Bank of Argentina maintains currency controls that limit our ability to access U.S.

dollars in Argentina and remit cash from our Argentine operations.

The execution of certain trades known as Blue Chip Swaps effectively results in a parallel U.S.

dollar exchange rate.

During the fiscal year ended 2023, we entered into a Blue Chip Swap transaction, which resulted in a $ 12.2 million loss on investment recorded in Gain on investment securities within our Consolidated Statements of Operations.

As a result of the Blue Chip Swap transaction, $ 9.8 million of net cash was repatriated to the U.S.

during the period.

Because of the impact of local laws, our future operations in certain areas may be conducted through entities in which local citizens own interests and through entities (including joint ventures) in which we hold only a minority interest or pursuant to arrangements under which we conduct operations under contract to local entities.

While we believe that neither operating through such entities nor pursuant to such arrangements would have a material adverse effect on our operations or revenues, there can be no assurance that we will in all cases be able to structure or restructure our operations to conform to local law (or the administration thereof) on terms acceptable to us.

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Although we attempt to minimize the potential impact of such risks by operating in more than one geographical area, during the fiscal year ended September 30, 2023, approximately 7.5 percent of our operating revenues were generated from international locations compared to 6.7 percent during the fiscal year ended September 30, 2022.

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The future occurrence of one or more international events arising from the types of risks described above could have a material adverse impact on our business, financial condition and results of operations.

NOTE 3 DISCONTINUED OPERATIONS

Noncurrent liabilities from discontinued operations include an uncertain tax liability related to the country of Venezuela.

Expenses incurred for in-country obligations are reported as discontinued operations within our Consolidated Statements of Operations.

The activity for each fiscal year presented was due to the remeasurement of an uncertain tax liability as a result of the devaluation of the Venezuela Bolivar.

Early in 2018, the Venezuelan government announced that it changed the existing dual-rate foreign currency exchange system by eliminating its heavily subsidized foreign exchange rate, which was 10 Bolivars per United States dollar, and relaunched an exchange system known as DICOM.

The Venezuela government also established a new currency called the “Sovereign Bolivar,” which was determined by the elimination of five zeros from the old currency.

The DICOM floating rate was approximately 4,181,782 , and 436,677 Bolivars per United States dollar at September 30, 2021 and 2020, respectively.

In October 2021, the Venezuelan government launched another monetary overhaul by cutting six zeros from the Bolivar in response to hyperinflation and to simplify accounting.

As such, as of September 30, 2022, the DICOM floating rate was approximately eight Bolivars per United States dollar.

The DICOM floating rate may not reflect the barter market exchange rates.

NOTE 3 PROPERTY, PLANT AND EQUIPMENT

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As these various projects are completed, the costs are then classified to their appropriate useful life category.

Impairments - Fiscal Year 2020

Consistent with our policy, we evaluate our drilling rigs and related equipment for impairment whenever events or changes in circumstances indicate the carrying value of these assets may exceed the estimated undiscounted future net cash flows.

Our evaluation, among other things, includes a review of external market factors and an assessment on the future marketability of specific rigs’ asset group.

During the second quarter of fiscal year 2020, several significant economic events took place that severely impacted the current demand on drilling services, including the significant drop in crude oil prices caused by OPEC+'s price war coupled with the decrease in the demand due to the COVID-19 pandemic.

To maintain a competitive edge in a challenging market, the Company’s management introduced a new strategy focused on operating various types of highly capable upgraded rigs and phasing out the older, less capable fleet.

This resulted in grouping the super-spec rigs of our legacy Domestic FlexRig ® 3 asset group and our FlexRig ® 5 asset group creating a new "Domestic super-spec FlexRig ® " asset group, while combining the legacy Domestic conventional asset group, FlexRig ® 4 asset group and FlexRig ® 3 non-super-spec rigs into one asset group (Domestic non-super-spec asset group).

Given the current and projected low utilization for our Domestic non-super-spec asset group and all International asset groups, we considered these economic factors to be indicators that these asset groups may be impaired.

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As a result of these indicators, we performed impairment testing at March 31, 2020 on each of our Domestic non super-spec and International conventional, FlexRig ® 3, and FlexRig ® 4 asset groups, which had an aggregate net book value of $ 605.8 million.

We concluded that the net book value of each asset group was not recoverable through estimated undiscounted cash flows and recorded a non-cash impairment charge of $ 441.4 million in the Consolidated Statement of Operations for the fiscal year ended September 30, 2020.

Of the $ 441.4 million total impairment charge recorded, $ 292.4 million and $ 149.0 million was recorded in the North America Solutions and International Solutions segments, respectively.

No further impairments were recognized in fiscal year 2020.

Impairment was measured as the amount by which the net book value of each asset group exceeded its fair value as of the assessment date.

The most significant assumptions used in our undiscounted cash flow model include timing on awards of future drilling contracts, drilling rig utilization, estimated remaining useful life, and net proceeds received upon future sale/disposition.

These assumptions are classified as Level 3 inputs by ASC Topic 820 Fair Value Measurement and Disclosures as they are based upon unobservable inputs and primarily rely on management assumptions and forecasts.

In determining the fair value of each asset group, we utilized a combination of income and market approaches.

The significant assumptions in the valuation are based on those of a market participant and are classified as Level 2 and Level 3 inputs by ASC Topic 820 Fair Value Measurement and Disclosures.

As of March 31, 2020, the Company also recorded an additional non-cash impairment charge related to in-progress drilling equipment and rotational inventory of $ 44.9 million and $ 38.6 million, respectively, which had aggregate book values of $ 68.4 million and $ 38.6 million, respectively, in the Consolidated Statement of Operations for the fiscal year ended September 30, 2020.

Of the $ 83.5 million total impairment charge recorded for in-progress drilling equipment and rotational inventory, $ 75.8 million and $ 7.7 million was recorded in the North America Solutions and International Solutions segments, respectively.

Depreciation in the Consolidated Statements of Operations of $ 375.7 million, $ 396.0 million and $ 412.5 million includes abandonments of $ 3.3 million, $ 6.6 million and $ 2.0 million for the fiscal years 2023, 2022 and 2021, respectively.

I n November 2022, a fire at a wellsite caused substantial damage to one of our super spec-rigs within our North America Solutions segment.

The major components were destroyed beyond repair and considered a total loss, and, as a result, these assets were written off and the rig was removed from our available rig count.

At the time of the loss, the rig was fully insured under replacement cost insurance.

The insurance recovery is expected to exceed the net book value of the components written off.

The loss of $ 9.2 million and an offsetting insurance recovery for the same amount are recorded within Depreciation and amortization in our Consolidated Statement of Operations for the fiscal year ended September 30, 2023.

During the fiscal year ended September 30, 2023, we collected $ 9.2 million of the total expected insurance proceeds.

Future proceeds in excess of the recognized loss will be recognized once all contingencies related to the insurance claim have been resolved.

Assets Held-for-Sale

The following table summarizes the balance (in thousands) of our assets held-for-sale at the dates indicated below:

The following table is a summary of the changes in the balance (in thousands) of our assets held-for-sale at the dates indicated below:

Balance at September 30, 2021

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Sale of assets held-for-sale ( 67,592 )

Reclassification to assets held and used ( 2,108 )

Balance at September 30, 2022

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Sale of assets held-for-sale ( 2,132 )

Reclassification to assets held and used ( 2,108 )

Impairment Expense ( 2,733 )

Balance at September 30, 2023

In March 2021, the Company's leadership continued the execution of the current strategy, which was initially introduced in 2019, focusing on operating various types of highly capable upgraded rigs and phasing out the older, less capable fleet.

Fiscal Year 2021 Activity

In March 2021, the Company's leadership decided to continue the strategy, that began in 2019, which was to focus on operating various types of highly capable upgraded rigs and phasing out the older, less capable fleet.

As a result, the Company developed a plan to sell 71 Domestic non-super-spec rigs, all within our North America Solutions segment, the majority of which were previously decommissioned, written down and/or held as capital spares.

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As a result, we recognized a non-cash impairment charge of $ 56.4 million during the fiscal year ended September 30, 2021 in the Consolidated Statement of Operations.

During the fiscal year ended September 30, 2022 and September 30, 2021 , we completed the sale of assets with a net book value of $ 2.6 million and $ 6.5 million, respectively, that were originally classified as held-for-sale during the second and third quarters of fiscal year 2021.

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During September 2021, the Company agreed to sell eight FlexRig land rigs with an aggregate net book value of $ 55.6 million to ADNOC Drilling Company P.J.S.C.

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Two of the eight rigs were already located in the U.A.E where ADNOC Drilling is domiciled with the remaining six rigs to be shipped from the United States.

We received the $ 86.5 million in cash consideration in advance of delivering the rigs.

As part of the sales agreement, the rigs were delivered and commissioned in stages over a twelve-month period subject to acceptance upon successful completion of final inspection on customary terms and conditions.

No rigs were delivered to ADNOC Drilling as of September 30, 2021 and, therefore, the total cash proceeds of $ 86.5 million was recorded in Accrued Liabilities within our Consolidated Balance Sheets as of September 30, 2021.

As of September 30, 2022, ADNOC Drilling accepted delivery of all eight rigs resulting in a gain of $ 3.1 million, after $ 27.8 million of selling costs, during the fiscal year ended September 30, 2022.

Upon final acceptance of delivery, these rigs were removed from assets classified as held-for-sale as of September 30, 2022.

The gain is recorded in Other (Gain) Loss on Sale of Assets within our Consolidated Statement of Operations for the fiscal year ended September 30, 2022 .

We paid approximately $ 21.6 million in cash charges attributable to selling costs for the eight rigs during fiscal year 2022.

The net book value of these assets were reclassified as held-for-sale in the fourth quarter of fiscal year 2021.

No rigs were delivered to ADNOC Drilling as of September 30, 2021.

During the fiscal year ended September 30, 2021, we formalized a plan to sell assets related to two of our lower margin service offerings, trucking and casing running services, which contributed approximately 2.8 percent to our consolidated revenue during fiscal year 2021, all within our North America Solutions segment.

The combined net book values of these assets of $ 23.2 million were written down to their combined fair value less estimated cost to sell of $ 8.8 million, and were reclassified as held-for-sale on the Consolidated Balance Sheets as of September 30, 2021 .

The combined net book values of these assets of $ 23.2 million were written down to their combined fair value less estimated cost to sell of $ 8.8 million, and were reclassified as held-for-sale.

As a result, we recognized a non-cash impairment charge of $ 14.4 million in the Consolidated Statements of Operations during the year ended September 30, 2021 .

During the fiscal year ended September 30, 2022, we closed on the sale of these assets in two separate transactions.

The sale of our trucking services assets was completed on November 3, 2021 while the sale of our casing running services assets was completed on November 15, 2021 for total consideration less costs to sell of $ 6.0 million, in addition to the possibility of future earnout proceeds, resulting in a loss of $ 3.4 million during the fiscal year ended September 30, 2022.

Losses related to the sale of these assets are recorded in Other (Gain) Loss on Sale of Assets within our Consolidated Statements of Operations.

During the year ended September 30, 2022 we recognized $ 1.1 million in earnout proceeds associated with the sale of our trucking services assets within Other (Gain) Loss on Sale of Assets on the Consolidated Statements of Operations.

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Fiscal Year 2022 Activity

During the fiscal year ended September 30, 2022, we closed on the sale of our trucking and casing running assets for total consideration less costs to sell of $ 6.0 million, in addition to the possibility of future earnout proceeds, resulting in a loss of $ 3.4 million recorded in Other (gain) loss on sale of assets within our Consolidated Statements of Operations.

We recognized earnout proceeds associated with the sale of our trucking and casing running assets of $ 1.6 million and $ 1.1 million during the fiscal years ended September 30, 2023 and 2022, respectively, in Other (gain) loss on sale of assets within our Consolidated Statements of Operations.

During the first quarter of fiscal year 2022, we identified two partial rig substructures that met the asset held-for-sale criteria and were reclassified as Assets held-for-sale on our Consolidated Balance Sheets.

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During the second quarter of fiscal year 2022, we completed the sale of these assets, resulting in no gain or loss as a result of the sale.

During the first quarter of fiscal year 2022, we identified two international FlexRig ® drilling rigs located in Colombia that met the asset held-for-sale criteria and were reclassified as Assets Held-for-Sale on our Consolidated Balance Sheets.

During the same period, we identified two international FlexRig ® drilling rigs located in Colombia that met the asset held-for-sale criteria and were reclassified as Assets held-for-sale on our Consolidated Balance Sheets.

In conjunction with establishing a plan to sell the two international FlexRig ® drilling rigs, we recognized a non-cash impairment charge of $ 2.5 million within our International Solutions segment and recorded in the Consolidated Statement of Operations during the fiscal year ended September 30, 2022 , as the rigs aggregate net book value of $ 3.4 million exceeded the fair value of the rigs less estimated cost to sell of $ 0.9 million.

During the second quarter of fiscal year ended September 30, 2022 , we completed the sale of the two international FlexRig ® drilling rigs for total consideration of $ 0.9 million, resulting in no gain or loss as a result of the sale.

The significant assumptions utilized in the valuations of held-for-sale were based on our intended method of disposal, historical sales of similar assets, and market quotes and are classified as Level 2 and Level 3 inputs by ASC Topic 820, Fair Value Measurement and Disclosures.

During the fiscal year ended September 30, 2022, ADNOC Drilling accepted delivery of eight rigs with an aggregate net book value of $ 55.6 million.

As a result, we recognized a gain of $ 3.1 million, after incurring $ 27.8 million of selling costs, during the fiscal year ended September 30, 2022 in Other (gain) loss on sale of assets within our Consolidated Statement of Operations.

Upon final acceptance of delivery, these rigs were removed from assets classified as held-for-sale as of September 30, 2022.

We paid approximately $ 21.6 million in cash charges attributable to selling costs for the eight rigs during fiscal year 2022.

Fiscal Year 2023 Activity

During the fiscal year ended September 30, 2023, the Company initiated a plan to decommission and scrap four international FlexRig ® drilling rigs and four conventional drilling rigs located in Argentina that are not suitable for unconventional drilling.

As a result, these rigs were reclassified to Assets held-for-sale on our Consolidated Balance Sheets.

The rigs’ aggregate net book value of $ 8.8 million was written down to the estimated scrap value of $ 0.7 million, which resulted in a non-cash impairment charge of $ 8.1 million within our International Solutions segment and recorded in Asset impairment charges within our Consolidated Statement of Operations during the fiscal year ended September 30, 2023.

During the fiscal year ended September 30, 2023, our North America Solutions assets that were previously classified as Assets held-for-sale at September 30, 2022 were either sold or written down to scrap value.

The aggregate net book value of these remaining assets was $ 3.0 million, which exceeded the estimated scrap value of $ 0.3 million, resulting in a non-cash impairment charge of $ 2.7 million.

During the same period, we also identified additional equipment that met the asset held-for-sale criteria and was reclassified to Assets held-for-sale on our Consolidated Balance Sheets.

The aggregate net book value of the equipment of $ 1.4 million was written down to its estimated scrap value of $ 0.1 million, resulting in a non-cash impairment charge of $ 1.3 million during the fiscal year ended September 30, 2023.

These impairment charges are recorded in Asset impairment charges within our North America Solutions segment in our Consolidated Statement of Operations.

The significant assumptions utilized in the valuations of held-for-sale assets were based on our intended method of disposal, historical sales of similar assets, and market quotes and are classified as Level 2 and Level 3 inputs by ASC Topic 820, Fair Value Measurement and Disclosures.

Although we believe the assumptions used in our analysis are reasonable and appropriate, different assumptions and estimates could materially impact the analysis and our resulting conclusion.

(Gain)/Loss on Sale of Assets

Prior to the fiscal year ended September 30, 2022, Gain on Reimbursement of Drilling Equipment and Other (Gain) Loss on Sale of Assets was presented in the aggregate as Gain (Loss) on Sale of Assets on our Consolidated Statements of Operations.

To conform with the current fiscal year presentation, we reclassified amounts previously presented in the Gain (Loss) on Sale of Assets during the years ended September 30, 2021 and 2020, as presented below.

Gain on Reimbursement of Drilling Equipment

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Fiscal Year 2023 During the fiscal year ended September 30, 2023, we recognized a loss of $ 17.1 million as a result of scrapping excess drilling equipment and spares.

Additionally, during the same fiscal period, we recognized a gain of $ 2.6 million, $ 2.4 million, and $ 2.5 million from vehicle sales, other drilling equipment sales, and other miscellaneous asset sales, respectively.

We also recognized a gain of $ 1.6 million in earnout proceeds associated with the sale of our trucking services assets during the fiscal year ended September 30, 2022 .

Fiscal Year 2022 During the first quarter of fiscal year 2022, we closed on the sale of our trucking and casing running assets resulting in a loss of $ 3.4 million, as mentioned above.

We also recognized a gain of $ 1.1 million in earnout proceeds associated with the sale of our trucking services assets during the fiscal year ended September 30, 2022 .

During the same fiscal period, ADNOC Drilling accepted delivery of all eight rigs resulting in an aggregate gain of $ 3.1 million, as mentioned above.

During the same fiscal period, ADNOC Drilling accepted delivery of eight rigs resulting in an aggregate gain of $ 3.1 million, as mentioned above.

We also recognized a gain of $ 4.2 million related to the sale of other held-for-sale assets (discussed above) during the fiscal year ended September 30, 2022 .

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Additionally, during the fiscal year ended September 30, 2021, we sold excess drilling equipment and spares, which resulted in a loss of $ 31.2 million and we also sold assets previously classified as held-for-sale, which resulted in a $ 3.1 million gain.

Fiscal Year 2020 During the fiscal year ended September 30, 2020, we closed on the sale of a portion of our real estate investment portfolio, including six industrial sites, for total consideration, net of selling related expenses, of $ 40.7 million and an aggregate net book value of $ 13.5 million, resulting in a gain of $ 27.2 million.

NOTE 4 LEASES

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Lease Obligations

Total rent expense was $ 12.4 million, $ 11.2 million and $ 17.3 million for the fiscal years ended September 30, 2023, 2022 and 2021, respectively.

Future minimum rental payments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year at September 30, 2023 (in thousands) are as follows:

Fiscal Year Amount

2024 $ 10,534

Thereafter 21,391

(1) Our future minimal rental payments exclude optional extensions that have not been exercised but are probable to be exercised in the future, those probable extensions are included in the operating lease liability balance.

Total rent expense was $ 11.2 million, $ 17.3 million and $ 18.6 million for the fiscal years ended September 30, 2022, 2021 and 2020, respectively.

The future minimum lease payments for our Tulsa corporate office and our Tulsa industrial facility represent a material portion of the amounts shown in the table above.

The lease agreement for our Tulsa corporate office commenced on May 30, 2003 and has subsequently been amended, most recently on April 1, 2021.

During the fiscal year ended September 30, 2023, we entered into a lease agreement to relocate our Tulsa corporate headquarters to a new office space.

This lease commenced during the fourth fiscal quarter of 2023 and resulted in a $ 17.6 million increase to right-of-use assets and lease liability on our Consolidated Balance Sheets.

In addition, we began amortizing the right of use asset over the initial lease term of approximately 12 years.

We also have two unpriced five-year extension options that were not recognized as part of the right-of-use asset and lease liability.

The future minimum lease payments for the new office space represent a material portion of the amounts shown in the table above.

Additionally, the future minimum lease payments for our legacy Tulsa corporate office and our Tulsa industrial facility represent a material portion of the amounts shown in the table above.

The lease agreement for our legacy Tulsa corporate office commenced on May 30, 2003 and was subsequently amended, most recently on April 1, 2021.

The agreement will expire on January 31, 2025;

however, we have two five-year renewal options, which were not recognized as part of our right-of-use assets and lease liabilities.

however, we have two five-year renewal options that will not be exercised, thus were not recognized as part of our right-of-use assets and lease liabilities.

The lease agreement for our Tulsa industrial facility, where we perform maintenance and assembly of FlexRig ® components, commenced on December 21, 2018 and will expire on June 30, 2025;

however, we have two two-year renewal options which were recognized as part of our right-of-use assets and lease liabilities.

During the fiscal year ended September 30, 2021, we downsized and relocated our Houston assembly facility to a new location.

Refer to Note 18—Restructuring Charges for additional details.

As a result, and during fiscal year 2021, we entered into a lease agreement for a new assembly facility located in Galena Park, Texas.

This lease agreement commenced on January 1, 2021 and will expire on December 31, 2030;

however, we have one unpriced renewal option for a minimum of five years and a maximum of 10 years, which was not recognized as part of our right-of-use assets and lease liabilities.

This contract is accounted for as an operating lease resulting in an operating lease right-of-use asset of $ 12.2 million and $ 16.0 million, and minimum lease liability of $ 12.5 million and $ 16.2 million, as of September 30, 2022 and 2021, respectively.

NOTE 5 GOODWILL AND INTANGIBLE ASSETS

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$ 100,961 $ 40,386 $ 60,575 $ 100,961 $ 33,807 $ 67,154

Amortization expense in the Consolidated Statements of Operations was $ 7.2 million for fiscal years 2022, 2021 and 2020, and is estimated to be $ 6.6 million for fiscal year 2023, and approximately $ 6.4 million for fiscal year 2024 through 2027.

Impairment - Fiscal Year 2020

Due to the market conditions described in Note 4—Property, Plant and Equipment, during the second quarter of fiscal year 2020, we concluded that goodwill and intangible assets might be impaired and tested the H&P Technologies reporting unit, where the goodwill balance is allocated and the intangible assets are recorded, for recoverability.

This resulted in a goodwill only non-cash impairment charge of $ 38.3 million recorded in the Consolidated Statement of Operations during the fiscal year ended September 30, 2020.

The recoverable amount of the H&P Technologies reporting unit was determined based on a fair value calculation which uses cash flow projections based on the Company's financial projections presented to the Board covering a five -year period, and a discount rate of 14.0 percent.

Cash flows beyond that five -year period were extrapolated using the fifth-year data with no implied growth factor.

The reporting unit level is defined as an operating segment or one level below an operating segment.

The recoverable amount of the intangible assets tested for impairment within the H&P Technologies reporting unit is determined based on undiscounted cash flow projections using the Company's financial projections presented to the Board covering a five-year period and extrapolated for the remaining weighted average useful lives of the intangible assets.

The most significant assumptions used in our cash flow model include timing of awarded future contracts, commercial pricing terms, utilization, discount rate, and the terminal value.

Although we believe the assumptions used in our analysis and the probability-weighted average of expected future cash flows are reasonable and appropriate, different assumptions and estimates could materially impact the analysis and our resulting conclusion.

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We had the following unsecured long-term debt outstanding with maturities shown in the following table:

Amortization expense in the Consolidated Statements of Operations was $ 6.6 million for fiscal year 2023, and $ 7.2 million for fiscal years 2022 and 2021, and is estimated to be $ 6.4 million for fiscal year 2024, and approximately $ 25.6 million for fiscal year 2025 through 2028.

We have the following unsecured long-term debt outstanding with maturities shown in the following table:

September 30, 2023 September 30, 2022

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Unsecured senior notes:

Due March 19, 2025 1

$ — $ — $ — $ 487,148 $ ( 3,662 ) $ 483,486

Due September 29, 2031 $ 550,000 $ ( 4,856 ) $ 545,144 $ 550,000 $ ( 7,390 ) $ 542,610

550,000 ( 7,390 ) 542,610 1,037,148 ( 11,665 ) 1,025,483

long-term debt due within one year $ — — — ( 487,148 ) 3,662 ( 483,486 )

Long-term debt $ 550,000 $ ( 4,856 ) $ 545,144 $ 550,000 $ ( 7,390 ) $ 542,610

(1) Debt was extinguished prior to maturity date.

Refer to 'Senior Notes' section below.

At September 30, 2023, aggregate maturities of long-term debt are as follows (in thousands):

Year ending September 30,

Thereafter - Due 2031 550,000

2.90 % Senior Notes due 2031 On September 29, 2021, we issued $ 550.0 million aggregate principal amount of the 2.90 percent 2031 Notes in an offering to persons reasonably believed to be qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act (“Rule 144A”) and to certain non-U.S.

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Interest on the 2031 Notes is payable semi-annually on March 29 and September 29 of each year, commencing on March 29, 2022.

The 2031 Notes will mature on September 29, 2031 and bear interest at a rate of 2.90 percent per annum.

In June 2022, we settled a registered exchange offer (the “Registered Exchange Offer”) to exchange the 2031 Notes for new, SEC-registered notes that are substantially identical to the terms of the 2031 Notes, except that the offer and issuance of the new notes have been registered under the Securities Act and certain transfer restrictions, registration rights and additional interest provisions relating to the 2031 Notes do not apply to the new notes.

All of the 2031 Notes were exchanged in the Registered Exchange Offer.

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The indenture governing the 2031 Notes contains certain covenants that, among other things and subject to certain exceptions, limit the ability of the Company and its subsidiaries to incur certain liens;

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4.65 % Senior Notes due 2025 On December 20, 2018, we issued approximately $ 487.1 million in aggregate principal amount of the 2025 Notes.

The debt issuance cost was being amortized straight-line over the stated life of the obligation, which approximated the effective interest method.

The debt issuance costs were being amortized straight-line over the stated life of the obligation, which approximated the effective interest method.

On September 27, 2021, the Company delivered a conditional notice of optional full redemption for all of the outstanding 2025 Notes at a redemption price calculated in accordance with the indenture governing the 2025 Notes, plus accrued and unpaid interest on the 2025 Notes to be redeemed.

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As a result, the associated make-whole premium of $ 56.4 million and the write off of the unamortized discount and debt issuance costs of $ 3.7 million were recognized during the first fiscal quarter of 2022 contemporaneously with the October 27, 2021 debt extinguishment and recorded in Loss on Extinguishment of Debt on our Consolidated Statements of Operations during the fiscal year ended September 30, 2022 .

Credit Facilities

Credit Facility

On November 13, 2018, we entered into a credit agreement by and among the Company, as borrower, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, which was amended on November 13, 2019, providing for an unsecured revolving credit facility (as amended, the “2018 Credit Facility”), that was set to mature on November 13, 2024.

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No other terms of the 2018 Credit Facility were amended in connection with this extension.

Additionally, on March 8, 2022, we entered into the second amendment to the 2018 Credit Facility, which, among other things, raised the number of potential future extensions of the maturity date applicable to extending lenders from one to two such potential extensions and replaced provisions in respect of interest rate determinations that were based on the London Interbank Offered Rate with provisions based on the Secured Overnight Financing Rate.

Lenders with $ 680.0 million of commitments under the 2018 Credit Facility also exercised their option to extend the maturity of the 2018 Credit Facility from November 12, 2025 to November 11, 2026.

On March 8, 2022, we entered into the second amendment to the 2018 Credit Facility, which, among other things, raised the number of potential future extensions of the maturity date applicable to extending lenders from one to two such potential extensions and replaced provisions in respect of interest rate determinations that were based on the London Interbank Offered Rate with provisions based on the Secured Overnight Financing Rate.

Additionally, lenders with $ 680.0 million of commitments under the 2018 Credit Facility exercised their option to extend the maturity of the 2018 Credit Facility from November 12, 2025 to November 11, 2026.

On February 10, 2023, lenders with $ 680.0 million of commitments under the 2018 Credit Facility exercised their option to extend the maturity of the 2018 Credit Facility from November 11, 2026 to November 12, 2027.

The remaining $ 70.0 million of commitments under the 2018 Credit Facility will expire on November 13, 2024, unless extended by the applicable lender before such date.

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The 2018 Credit Facility has $ 750.0 million in aggregate availability with a maximum of $ 75.0 million available for use as letters of credit.

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As of September 30, 2023, we had $ 95.0 million in uncommitted bilateral credit facilities, for the purpose of obtaining the issuance of international letters of credit, bank guarantees, and performance bonds.

Of the $ 55.0 million, $ 38.1 million of financial guarantees were outstanding as of September 30, 2022.

Of the $ 95.0 million, $ 40.0 million was outstanding as of September 30, 2023.

Separately, we had $ 2.1 million in standby letters of credit and bank guarantees outstanding.

In total, we had $ 42.1 million outstanding as of September 30, 2023.

In October 2022, we increased one of our standby letters of credit by $ 1.9 million.

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The applicable agreements for all unsecured debt contain additional terms, conditions and restrictions that we believe are usual and customary in unsecured debt arrangements for companies that are similar in size and credit quality.

At September 30, 2023, we were in compliance with all debt covenants.

At September 30, 2022, aggregate maturities of long-term debt are as follows (in thousands):

Year ending September 30,

Thereafter - Due 2031 550,000

NOTE 7 INCOME TAXES

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Total provision (benefit) $ 159,279 $ 24,366 $ ( 103,721 )

2022 FORM 10-K | 80

Prior to the fiscal year ended September 30, 2023, Income from discontinued operations was presented as a separate line item on our Consolidated Statements of Operations.

To conform with the current fiscal year presentation, we reclassified amounts previously presented in Income from discontinued operations to Other within Other income (expense) on our Consolidated Statements of Operations for the years ended September 30, 2022 and September 30, 2021.

Thus, the September 30, 2022 and September 30, 2021 amounts of domestic and foreign income (loss) before income taxes and the September 30, 2022 and September 30, 2021 reconciliation of our effective income tax rates to the U.S.

Federal income tax rates have been revised to conform with the current fiscal year presentation.

The amounts of domestic and foreign income (loss) before income taxes are as follows:

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Effective income tax rate 26.8 % 77.8 % 24.1 %

Effective tax rates differ from the U.S.

federal statutory rate of 21.0 percent due to state and foreign income taxes and the tax effect of non-deductible expenditures.

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Deferred Taxes

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The change in our net deferred tax assets and liabilities is impacted by foreign currency remeasurement.

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As of September 30, 2022, we had federal, state and foreign tax net operating loss carryforwards of approximately $ 4.5 million, $ 45.7 million and $ 14.3 million, respectively, federal and foreign research and development tax credits of approximately $ 0.4 million and $ 0.5 million, respectively, and foreign tax credit carryforwards of approximately $ 0.9 million which will expire in fiscal 2023 through 2042 and some of which can be carried forward indefinitely.

As of September 30, 2023, we had federal, state and foreign tax net operating loss carryforwards of approximately $ 2.6 million, $ 14.8 million and $ 14.8 million, respectively, and federal and foreign research and development tax credits of approximately $ 0.4 million and $ 1.0 million, respectively, which will expire in fiscal 2024 through 2043 and some of which can be carried forward indefinitely.

Certain of these carryforwards are subject to various rules which impose limitations on their utilization.

The valuation allowance is primarily attributable to foreign net operating loss carryforwards of $ 3.1 million, foreign tax credit carryforwards of $ 0.9 million, and equity compensation of $ 6.8 million which more likely than not will not be utilized.

The valuation allowance is primarily attributable to foreign net operating loss carryforwards of $ 2.6 million and equity compensation of $ 6.9 million which more likely than not will not be utilized.

Unrecognized Tax Benefits

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Unrecognized tax benefits at September 30, $ 247 $ 960 $ 1,678

As of September 30, 2022, 2021 and 2020, our liability for unrecognized tax benefits includes $ 0.7 million and $ 1.4 million and $ 13.0 million, respectively, of unrecognized tax benefits related to discontinued operations that, if recognized, would not affect the effective tax rate.

The remaining unrecognized tax benefits would affect the effective tax rate if recognized.

The liabilities for unrecognized tax benefits and related interest and penalties are included in other noncurrent liabilities in our Consolidated Balance Sheets.

For the next 12 months, we cannot predict with certainty whether we will achieve ultimate resolution of any uncertain tax position associated with our U.S.

and international operations that could result in increases or decreases of our unrecognized tax benefits.

However, we do not expect any such increases or decreases to have a material effect on our results of operations or financial position.

As of September 30, 2023, we have recorded approximately $ 3.1 million of unrecognized tax benefits, interest, and penalties.

We believe it is reasonably possible up to $ 2.6 million of the unrecognized tax benefits, interest, and penalties will be recognized as of June 30, 2024 as a result of a lapse of the statute of limitations.

We cannot predict with certainty if we will achieve ultimate resolution of any additional uncertain tax positions associated with our U.S.

and international operations resulting in any additional material increases or decreases of our unrecognized tax benefits for the next twelve months.

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We file a consolidated U.S.

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NOTE 8 SHAREHOLDERS’ EQUITY

The Company has an evergreen authorization from the Board of Directors (the "Board") for the repurchase of up to four million common shares in any calendar year.

The repurchases may be made using our cash and cash equivalents or other available sources.

During the fiscal year ended September 30, 2022 and 2020, we repurchased 3.2 million common shares at an aggregate cost of $ 77.0 million and 1.5 million common shares at an aggregate cost of $ 28.5 million, respectively, which are held as treasury shares.

The Company has an evergreen authorization from the Board of Directors for the repurchase of up to four million common shares in any calendar year.

In December 2022, the Board of Directors increased the maximum number of shares authorized to be repurchased in calendar year 2023 to five million common shares.

On June 7, 2023, the Board of Directors further increased the maximum number of shares authorized to be repurchased in calendar year 2023 to seven million shares.

The repurchases are made using our cash and cash equivalents or other available sources and are held as treasury shares on our Consolidated Balance Sheets.

During the fiscal year ended September 30, 2023 and 2022, we repurchased 6.5 million common shares at an aggregate cost of $ 249.0 million, including excise tax of $ 1.8 million, and 3.2 million common shares at an aggregate cost of $ 77.0 million, respectively, which are held as treasury shares.

There were no repurchases of common shares during the fiscal year ended September 30, 2021.

During the year ended September 30, 2023, we declared $ 200.0 million in cash dividends.

A cash dividend of $ 0.25 per share was declared on September 7, 2022 for shareholders of record on November 15, 2022, payable on December 1, 2022.

A base cash dividend of $ 0.25 per share was declared on September 6, 2023 for shareholders of record on November 20, 2023, payable on December 4, 2023.

As a result, we recorded a Dividend Payable of $ 25.2 million on our Consolidated Balance Sheets as of September 30, 2023.

2022 FORM 10-K | 82

Accumulated Other Comprehensive Loss

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$ ( 7,981 ) $ ( 12,072 ) $ ( 20,244 )

The following is a summary of the changes in accumulated other comprehensive loss, net of tax, by component for the fiscal year ended September 30, 2022:

The following is a summary of the changes in accumulated other comprehensive loss, net of tax, for the fiscal year ended September 30, 2023:

(in thousands) Defined Benefit Pension Plan

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For any contracts that include a provision for pooled term days at contract inception, followed by the assignment of days to specific rigs throughout the contract term, we have elected, as a practical expedient, to recognize revenue in the amount to which the entity has a right to invoice, as permitted by ASC 606.

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Performance-based contracts are contracts pursuant to which we are compensated partly based upon our performance against a mutually agreed upon set of predetermined targets.

These contract types are relatively new to the industry and typically have a lower base dayrate, but give us the opportunity to receive additional compensation by meeting or exceeding certain performance targets agreed to by our customers.

The variable consideration that we expect to receive is estimated at the most likely amount, and constrained to an amount such that it is probable a significant reversal of revenue previously recognized will not occur based on the performance targets.

Total revenue recognized from performance contracts, including performance bonuses, was $ 1.2 billion, $ 0.7 billion and $ 0.3 billion during the fiscal years ended September 30, 2023, 2022 and 2021, respectively, of which, $ 47.3 million, $ 38.8 million and $ 17.4 million was related to performance bonuses recognized due to the achievement of performance targets during the fiscal years ended September 30, 2023, 2022 and 2021, respectively.

Contracts generally contain renewal or extension provisions exercisable at the option of the customer at prices mutually agreeable to us and the customer.

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Revenues from early terminated contracts are recognized when all contractual requirements have been met.

During the fiscal years ended September 30, 2022, 2021 and 2020, early termination revenue associated with term contracts was approximately $ 0.7 million, $ 7.7 million and $ 73.4 million, respectively.

We also act as a principal for certain reimbursable services and auxiliary equipment provided by us to our clients, for which we incur costs and earn revenues.

During the fiscal years ended September 30, 2023, 2022 and 2021, early termination revenue associated with term contracts was $ 2.3 million, $ 0.7 million and $ 7.7 million, respectively.

We also act as a principal for certain reimbursable services and auxiliary equipment provided by us to our clients, primarily related to rig move trucking services, for which we incur costs and earn revenues.

Many of these costs are variable, or dependent upon the activity that is performed each day under the related contract.

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Revenue associated with the mobilization and demobilization of our drilling rigs to and from the client’s drill site do not relate to a distinct good or service.

These revenues are deferred and recognized on a straight-line basis over the related contract term that drilling services are provided.

2022 FORM 10-K | 83

These revenues are deferred and recognized ratably over the related contract term that drilling services are provided.

Demobilization fees expected to be received upon contract completion are estimated at contract inception and recognized on a straight-line basis over the contract term.

The amount of demobilization revenue that we ultimately collect is dependent upon the specific contractual terms, most of which include provisions for reduced or no payment for demobilization when, among other things, the contract is renewed or extended with the same client, or when the rig is subsequently contracted with another client prior to the termination of the current contract.

Since revenues associated with demobilization activity are typically variable, at each period end, they are estimated at the most likely amount, and constrained when the likelihood of a significant reversal is probable.

Since revenues associated with demobilization activity are typically variable, at each period end, they are estimated at the most likely amount, and constrained to an amount such that it is probable a significant reversal of revenue previously recognized will not occur.

Any change in the expected amount of demobilization revenue is accounted for with the net cumulative impact of the change in estimate recognized in the period during which the revenue estimate is revised.

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The settlement required that YPF make a one-time cash payment to H&P in the amount of $ 11.0 million and enter into drilling service contracts for three drilling rigs, each with multi-year terms.

In addition, both parties were released of all outstanding claims against each other, and as a result, H&P recognized $ 5.4 million in revenue primarily due to accrued contingent liabilities for disputed amounts.

In addition, both parties were released of all outstanding claims against each other, and as a result, H&P recognized $ 5.4 million in revenue primarily due to accrued disputed amounts.

Total revenue recognized as a result of the settlement in the amount of $ 16.4 million is included in Drilling services revenue within the International Solutions segment on our Consolidated Statements of Operations for the fiscal year ended September 30, 2022.

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Abnormal mobilization costs are fulfillment costs that are incurred from excessive resources, wasted or spoiled materials, and unproductive labor costs that are not otherwise anticipated in the contract price and are expensed as incurred.

As of September 30, 2022 and 2021, we capitalized fulfillment costs of $ 6.3 million and $ 4.3 million respectively, which is included within Prepaid Expenses and Other Assets on our Consolidated Balance Sheets.

As of September 30, 2023 and 2022, we capitalized fulfillment costs of $ 11.4 million and $ 6.3 million respectively, which is included within Prepaid expenses and Other noncurrent assets on our Consolidated Balance Sheets.

If capital modification costs are incurred for rig modifications or if upgrades are required for a contract, these costs are considered to be capital improvements.

These costs are capitalized as property, plant and equipment and depreciated over the estimated useful life of the improvement.

2023 FORM 10-K | 82

Remaining Performance Obligations

The total aggregate transaction price allocated to the unsatisfied performance obligations, commonly referred to as backlog, as of September 30, 2023 was approximately $ 1.4 billion, of which $ 0.9 billion is expected to be recognized during fiscal year 2024, and approximately $ 0.5 billion in fiscal year 2025 and thereafter.

These amounts do not include anticipated contract renewals.

These amounts do not include anticipated contract renewals or expected performance bonuses as part of its calculation.

Additionally, contracts that currently contain month-to-month terms are represented in our backlog as one month of unsatisfied performance obligations.

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Contract assets, net $ 6,560 $ 6,319

2022 FORM 10-K | 84

(in thousands) September 30, 2022

(in thousands)

Contract liabilities balance at October 1, 2021 $ 9,286

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NOTE 10 STOCK-BASED COMPENSATION

On March 3, 2020, the Helmerich & Payne, Inc.

2020 Omnibus Incentive Plan (the “2020 Plan”) was approved by our stockholders.

The 2020 Plan is a stock and cash-based incentive plan that, among other things, authorizes the Board or Human Resources Committee of the Board to grant executive officers, employees and non-employee directors stock options, stock appreciation rights, restricted shares and restricted share units (including performance share units), share bonuses, other share-based awards and cash awards.

The Helmerich & Payne, Inc.

Amended and Restated 2020 Omnibus Incentive Plan (the “2020 Plan”) approved by our stockholders is a stock and cash-based incentive plan that, among other things, authorizes the Board or Human Resources Committee of the Board to grant executive officers, employees and non-employee directors stock options, stock appreciation rights, restricted shares and restricted share units (including performance share units), share bonuses, other share-based awards and cash awards.

Restricted stock may be granted for no consideration other than prior and future services.

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Stock options expire ten years after the grant date.

The 2020 Plan governs all of our stock-based awards granted on or after March 3, 2020.

Awards outstanding under the Helmerich & Payne, Inc.

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During the fiscal year ended September 30, 2023, 591,838 shares of restricted stock awards and 144,136 performance share units were granted under the 2020 Plan.

A summary of compensation cost for stock-based payment arrangements recognized in Drilling Services Operating Expense, Research and Development Expense and Selling, General and Administrative Expense on our Consolidated Statements of Operations, in fiscal years 2022, 2021 and 2020 is as follows:

2023 FORM 10-K | 83

A summary of compensation cost for stock-based payment arrangements recognized in Drilling services operating expense, Research and development expense and Selling, general and administrative expense on our Consolidated Statements of Operations is as follows:

September 30,

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Selling, general and administrative 24,632 21,339 20,660

Restructuring charges 1

$ 32,456 $ 28,032 $ 27,858

$ 28,032 $ 27,858 $ 36,329

(1) These restructuring charges are specific to the stock-based compensation benefit which resulted from the recognition of forfeitures in fiscal year 2020.

Refer to Note 18—Restructuring Charges to our Consolidated Financial Statements for details.

Restricted Stock

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That cost is expected to be recognized over a weighted-average period of 1.9 years.

2022 FORM 10-K | 85

A summary of the status of our restricted stock awards as of September 30, 2023, and of changes in restricted stock outstanding during the fiscal years ended September 30, 2023, 2022 and 2021, is as follows:

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Weighted-Average Grant Date Fair Value per Share

Non-vested restricted stock outstanding at October 1, 1,412 $ 37.36 1,280 $ 49.81 1,085 $ 61.28

Non-vested restricted stock outstanding as of the beginning of period 1,493 $ 30.85 1,412 $ 37.36 1,280 $ 49.81

Granted 592 44.48 744 25.83 701 25.61

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Phantom stock units are subject to a vesting period of one year from the grant date.

During the fiscal years ended September 30, 2022, 2021, and 2020, 14,199 , 18,906 , and 20,616 restricted phantom stock units were granted, respectively.

During the fiscal years ended September 30, 2022, and 2021, 18,906 and 20,616 restricted phantom stock units vested during the period, respectively.

There were no restricted phantom stock units that vested during fiscal year 2020, as it was the first year that restricted phantom stock units were granted.

During the fiscal years ended September 30, 2023, 2022, and 2021, 12,591 , 14,199 , and 18,906 restricted phantom stock units were granted, respectively, and 14,199 , 18,906 and 20,616 restricted phantom stock units vested, respectively.

(2) The number of restricted stock awards vested includes shares that we withheld on behalf of our employees to satisfy the statutory tax withholding requirements.

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The vesting of the performance units is generally dependent on (i) the achievement of the Company’s total shareholder return (“TSR”) performance goals relative to the TSR achievement of a peer group of companies (the “Peer Group”) over the applicable performance cycle, and (ii) the continued employment of the recipient of the performance unit award throughout the Vesting Period.

The Vesting Period for performance units granted in December 2018 ended on December 31, 2021 and the performance units earned were settled in shares of common stock during the second quarter of fiscal year 2022.

At the end of the Vesting Period, recipients receive dividend equivalents, if any, with respect to the number of vested performance units.

The Vesting Period for performance units granted in November 2019 ended on December 31, 2022 and the performance units eligible to vest were settled in shares of common stock in January 2023.

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Additional performance units are credited based on the amount of cash dividends on our common stock divided by the market value of our common stock on the date such dividend is paid.

Such dividend equivalents are subject to the same terms and conditions as the underlying performance units and are settled or forfeited in the same manner and at the same time as the performance units to which they were credited.

The vesting of units ranges from zero to 200 percent of the units granted depending on the Company’s TSR relative to the TSR of the Peer Group on the vesting date.

Performance units granted in December 2022 include an additional return on invested capital (“ROIC”) performance metric.

The number of these performance units that otherwise would be paid out solely based on the achievement of TSR performance goals may increase or decrease by 25 % based on the Company’s ROIC performance over a three year period.

The grant date fair value of performance units was determined through use of the Monte Carlo simulation method.

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That cost is expected to be recognized over a weighted-average period of 1.8 years.

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A summary of the status of our performance units as of September 30, 2022, 2021 and 2020 and changes in non-vested performance units outstanding during the fiscal years ended September 30, 2022, 2021 and 2020 is presented below:

A summary of the status of our performance units and changes in non-vested performance units outstanding is presented below:

2023 2022 2021

(in thousands, except per share amounts) Shares Weighted-Average Grant Date Fair Value per Share Shares Weighted-Average Grant Date Fair Value per Share Shares Weighted-Average Grant Date Fair Value per Share

Non-vested performance units outstanding at October 1, 699 $ 41.55 337 $ 51.09 145 $ 62.66

Non-vested performance units outstanding as of the beginning of period 726 $ 33.67 699 $ 41.55 337 $ 51.09

Granted 144 54.30 227 30.12 313 29.77

( 286 ) 43.40 ( 161 ) 62.66 — —

Dividend rights performance units credited 15 32.82 60 49.64 — —

Dividend equivalent rights credited and performance factor adjustment 2

212 35.94 15 32.82 60 49.64

Forfeited — — ( 54 ) 34.16 ( 11 ) 43.40

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(1) The number of performance units vested includes units that we withheld on behalf of our employees to satisfy the statutory tax withholding requirements.

(2) At the end of the Vesting Period, recipients receive dividend equivalents, if any, with respect to the number of vested performance units.

The vesting of units ranges from zero to 200 percent of the units granted depending on the Company's total shareholder return ("TSR") relative to the TSR of the Peer Group on the vesting date.

(3) Of the total non-vested performance units at the end of the period, specified performance criteria has been achieved with respect to 233,322 performance units which is calculated based on the payout percentage for the completed performance period.

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The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings.

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Basic earnings per share is computed utilizing the two-class method and is calculated based on the weighted-average number of common shares outstanding during the periods presented.

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Under the two-class method of calculating earnings per share, dividends paid and a portion of undistributed net income, but not losses, are allocated to unvested restricted stock grants that receive dividends, which are considered participating securities.

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Prior to the fiscal year ended September 30, 2023, Income from discontinued operations was presented as a separate line item on our Consolidated Statements of Operations.

To conform with the current fiscal year presentation, basic and diluted earnings (loss) per share for continuing and discontinued operations are presented in the aggregate, for the years ended September 30, 2022 and September 30, 2021, as presented below.

The following table sets forth the computation of basic and diluted earnings (loss) per share:

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(in thousands, except per share amounts) 2023 2022 2021

Income (loss) from continuing operations $ 6,552 $ ( 337,459 ) $ ( 496,392 )

Income from discontinued operations 401 11,309 1,895

Net income (loss) $ 434,100 $ 6,953 $ ( 326,150 )

Adjustment for basic earnings (loss) per share:

Losses allocated to unvested shareholders ( 1,508 ) ( 1,350 ) ( 2,647 )

Earnings allocated to unvested shareholders ( 5,863 ) ( 1,508 ) ( 1,350 )

Numerator for basic earnings (loss) per share 428,237 5,445 ( 327,500 )

From continuing operations 5,044 ( 338,809 ) ( 499,039 )

From discontinued operations 401 11,309 1,895

5,445 ( 327,500 ) ( 497,144 )

Adjustment for diluted earnings (loss) per share:

Effect of reallocating undistributed earnings of unvested shareholders 12 — —

Numerator for diluted earnings (loss) per share $ 428,249 $ 5,445 $ ( 327,500 )

From continuing operations 5,044 ( 338,809 ) ( 499,039 )

From discontinued operations 401 11,309 1,895

$ 5,445 $ ( 327,500 ) $ ( 497,144 )

Denominator for basic earnings (loss) per share - weighted-average shares 102,447 105,891 107,818

Effect of dilutive shares from stock options, restricted stock and performance share units 664 — —

Effect of dilutive shares from restricted stock and performance share units 405 664 —

Denominator for diluted earnings (loss) per share - adjusted weighted-average shares 102,852 106,555 107,818

Basic earnings (loss) per common share $ 4.18 $ 0.05 $ ( 3.04 )

Income (loss) from continuing operations $ 0.05 $ ( 3.14 ) $ ( 4.62 )

Income from discontinued operations — 0.10 0.02

Net income (loss) $ 0.05 $ ( 3.04 ) $ ( 4.60 )

Diluted earnings (loss) per common share $ 4.16 $ 0.05 $ ( 3.04 )

Income (loss) from continuing operations $ 0.05 $ ( 3.14 ) $ ( 4.62 )

Income from discontinued operations — 0.10 0.02

Net income (loss) $ 0.05 $ ( 3.04 ) $ ( 4.60 )

We had a net loss for fiscal years 2021 and 2020.

Accordingly, our diluted earnings per share calculation for those years were equivalent to our basic earnings per share calculation since diluted earnings per share excluded any assumed exercise of equity awards.

We had a net loss for fiscal year 2021.

Accordingly, our diluted earnings per share calculation for that year was equivalent to our basic earnings per share calculation since diluted earnings per share excludes any assumed vesting of equity awards.

These were excluded because they were deemed to be anti-dilutive, meaning their inclusion would have reduced the reported net loss per share in the applicable period.

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Weighted-average price per share $ 62.08 $ 62.36 $ 57.23

2023 FORM 10-K | 86

NOTE 12 FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS

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Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date.

We use the fair value hierarchy established in ASC 820-10 to measure fair value to prioritize the inputs:

We use the following fair value hierarchy established in ASC 820-10 to measure fair value to prioritize the inputs:

• Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.

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or other inputs that are observable or can be corroborated by observable market data.

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• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Recurring Fair Value Measurements

The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis and indicate the level in the fair value hierarchy in which we classify the fair value measurement.

Fair Value Measurements

The following tables summarize our financial assets and liabilities measured at fair value and indicate the level in the fair value hierarchy in which we classify the fair value measurement as of the dates indicated below.

September 30, 2023

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government and federal agency securities 44,836 44,836 — —

Total short-term investments 117,101 18,837 98,264 —

Total 93,600 44,836 48,764 —

Long-term investments:

Recurring fair value measurements:

Equity securities:

Non-qualified supplemental savings plan 14,597 14,597 — —

Equity investment in ADNOC Drilling 147,370 147,370 — —

Debt security investment in Galileo 33,000 — — 33,000

Other debt securities 565 — — 565

Total investments 195,236 161,671 — 33,565

Investment in ADNOC Drilling 174,758 174,758 — —

Investment in Tamboran 9,920 9,920 — —

Debt securities:

Investment in Galileo 35,434 — — 35,434

Geothermal debt securities 2,006 — — 2,006

Total 236,715 199,275 — 37,440

Nonrecurring fair value measurements 1 :

Other equity securities 2

2,430 — — 2,430

Total 2,430 — — 2,430

Total $ 239,145 $ 199,275 $ — $ 39,870

Contingent consideration $ 9,455 $ — $ — $ 9,455

(1) As of September 30, 2023, our equity security investments in geothermal energy was $ 25.2 million.

None of these investment were marked to fair value during the period.

The investments are measured at cost, less any impairments.

(2) As of September 30, 2023, our other equity securities subject to measurement at fair value on a nonrecurring basis was $ 3.0 million, of which $ 2.4 million is marked to fair value.

The remaining $ 0.6 million is measured at cost, less any impairments.

2023 FORM 10-K | 87

September 30, 2022

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government and federal agency securities 18,837 18,837 — —

Total short-term investments 198,700 5,750 192,950 —

Total 117,101 18,837 98,264 —

Long-term investments:

Recurring fair value measurements:

Equity securities:

Non-qualified supplemental savings plan 14,301 14,301 — —

Equity and debt securities 14,358 13,858 — 500

Cornerstone investment in ADNOC Drilling 100,000 100,000 — —

Total investments 132,579 132,079 — 500

Investment in ADNOC Drilling 147,370 147,370 — —

Debt securities:

Investment in Galileo 33,000 — — 33,000

Other 565 — — 565

Total 195,236 161,671 — 33,565

Nonrecurring fair value measurements 1 :

Geothermal equity securities 2

10,707 — — 10,707

Total 10,707 — — 10,707

Total $ 205,943 $ 161,671 $ — $ 44,272

Contingent consideration $ 4,022 $ — $ — $ 4,022

Short-term Investments Short-term investments primarily include securities classified as trading securities.

(1) As of September 30, 2022, our other equity security investments are included in our nonrecurring fair value assets.

The balances of these equity security investments was $ 0.6 million measured at cost, less any impairments.

(2) As of September 30, 2022, our equity security investments in geothermal energy was $ 23.1 million, of which $ 10.7 million was marked to fair value during the period.

The remaining $ 12.4 million is measured at cost, less any impairments.

Recurring Fair Value Measurements

Short-term Investments

Short-term investments primarily include securities classified as trading securities.

Both realized and unrealized gains and losses on trading securities are included in other income (expense) in the Consolidated Statements of Operations.

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Level 2 inputs include corporate bonds measured using broker quotations that utilize observable market inputs.

Long-term Investments Our long-term investments include debt and equity securities and assets held in a Non-Qualified Supplemental Savings Plan ("Savings Plan") and are recorded within Investments on our Consolidated Balance Sheets.

Long-term Investments

Equity Securities Our long-term investments include debt and equity securities and assets held in a Non-Qualified Supplemental Savings Plan ("Savings Plan") and are recorded within Investments on our Consolidated Balance Sheets.

Our assets that we hold in the Savings Plan are comprised of mutual funds that are measured using Level 1 inputs.

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During September 2021, the Company made a $ 100.0 million cornerstone investment in ADNOC Drilling in advance of its announced IPO, representing 159.7 million shares of ADNOC Drilling, equivalent to a one percent ownership stake and subject to a three-year lockup period.

ADNOC Drilling’s IPO was completed on October 3, 2021, and its shares are listed and traded on the Abu Dhabi Securities Exchange.

Our investment is classified as a long-term equity investment within Investments in our Consolidated Balance Sheets.

We have applied the guidance in Topic 820, Fair Value Measurement, in the initial accounting of the transaction and the subsequent revaluation of the investment balance, concluding that the contractual restriction on the sale of an equity security that is publicly traded is not considered in measuring fair value.

During the fiscal year ended September 30, 2022, we recognized a gain of $ 47.4 million on our Consolidated Statements of Operations, as a result of the change in fair value of the investment during the period.

During September 2021, the Company made a $ 100.0 million cornerstone investment in ADNOC Drilling in advance of its announced initial public offering, representing 159.7 million shares of ADNOC Drilling, equivalent to a one percent ownership stake and subject to a three-year lockup period.

ADNOC Drilling’s initial public offering was completed on October 3, 2021, and its shares are listed and traded on the Abu Dhabi Securities Exchange.

Our investment is classified as a long-term equity investment within Investments on our Consolidated Balance Sheets and measured at fair value with any gains or losses recognized through net income (loss) and recorded within Gain (loss) on investment securities on our Consolidated Statements of Operations.

During the fiscal year ended September 30, 2023, we early adopted ASU No.

2022-03 which states that the contractual restriction on the sale of an equity security that is publicly traded is not considered in measuring fair value.

The provisions of ASU No.

2022-03 were consistent with our historical accounting for our investment in ADNOC Drilling.

During the fiscal year ended September 30, 2023 and 2022, we recognized a gain of $ 27.4 million and $ 47.4 million on our Consolidated Statements of Operations for each period respectively, as a result of the change in fair value of the investment during the period.

As of September 30, 2023, this investment is classified as a Level 1 investment based on the quoted stock price on the Abu Dhabi Securities Exchange.

During the fiscal year ended September 30, 2022, the Company made a $ 33.0 million cornerstone investment in Galileo Holdco 2 Limited Technologies ("Galileo Holdco 2"), part of the group of companies known as Galileo Technologies (“Galileo”) in the form of a convertible note.

During the fiscal year ended September 30, 2022, we sold our remaining equity securities of approximately 467.5 thousand shares in Schlumberger, Ltd.

and received proceeds of approximately $ 22.0 million.

For the fiscal year ended September 30, 2022, we recorded a gain of $ 8.2 million related to this investment, which includes a $ 0.5 million gain recognized upon the sale of our investment and a $ 7.7 million gain as a result of the change in fair value of the investment during the period.

This activity is reported in Gain (loss) on investment securities in our Consolidated Statements of Operations.

This investment was classified as Level 1 and based on the quoted stock price.

Equity Securities with Fair Value Option In October 2022, we made a $ 14.1 million equity investment, representing 106.0 million common shares in Tamboran Resources Limited, a publicly traded company on the Australian Securities Exchange Ltd under the ticker "TBN." Tamboran is focused on playing a constructive role in the global energy transition towards a lower carbon future, by developing a significantly low CO 2 gas resource within Australia's Beetaloo Sub-basin.

We believe we have a significant influence, but not control or joint control over the investee, due to several factors, including our ownership percentage (approximately 6.2 percent as of September 30, 2023), operational involvement and role on the investee's board of directors.

Our investment is classified as a long-term equity investment within Investments on our Consolidated Balance Sheet as of September 30, 2023.

We consider this investment to have a readily determinable fair value and have elected to account for this investment using the fair value option with any changes in fair value recognized through net income (loss).

Under the guidance, Topic 820, Fair Value Measurement, this investment is classified as a Level 1 investment based on the quoted stock price which is publicly available.

During the year ended September 30, 2023, we recognized a loss of $ 4.2 million recorded within Gain (loss) on investment securities on our Consolidated Statements of Operations, as a result of the change in fair value of the investment during the period.

Debt Securities During April 2022, the Company made a $ 33.0 million cornerstone investment in Galileo Holdco 2 Limited Technologies ("Galileo Holdco 2"), part of the group of companies known as Galileo Technologies (“Galileo”) in the form of notes with an option to convert into common shares of the parent of Galileo Holdco 2 ("Galileo Parent").

Galileo specializes in liquification, natural gas compression and re-gasification modular systems and technologies to make the production, transportation, and consumption of natural gas, biomethane, and hydrogen more economically viable.

The convertible note bears interest at 5.0 percent per annum with a maturity date of the earlier of April 2027 or an exit event (as defined in the agreement as either an initial public offering or a sale of Galileo).

If the conversion option is exercised, the note would convert into common shares of the parent of Galileo Holdco 2 ("Galileo Parent").

We do not intend to sell this investment prior to its maturity date or an exit event.

As of September 30, 2022, the fair value of the convertible note was approximately equal to the cost basis.

All of our long-term debt securities, including our investment in Galileo, are classified as available-for-sale and are measured using Level 3 unobservable inputs based on the absence of market activity.

The following table reconciles changes in the fair value of our Level 3 assets for the periods presented below:

(in thousands) 2022 2021

Assets at beginning of period $ 500 $ 500

Purchases 36,065 —

Transfers out 1

Assets at end of period $ 33,565 $ 500

(1) Conversion from debt to equity security

The following table provides quantitative information (in thousands) about our Level 3 unobservable significant inputs related to our debt security investment with Galileo at September 30, 2022:

Fair Value Valuation Technique Unobservable Inputs

During the fiscal year ended September 30, 2023, our convertible note agreement with Galileo was amended to include any interest which has accrued but not yet compounded or issued as a note.

As a result, we have included accrued interest in our total investment balance.

We currently do not intend to sell this investment prior to its maturity date or an exit event.

As of September 30, 2023 and 2022, the fair value of the convertible note was approximately equal to the cost basis.

The following table provides quantitative information about our Level 3 unobservable significant inputs related to our debt security investment with Galileo at the dates included below:

September 30, 2023

Fair Value (in thousands)

Valuation Technique Unobservable Inputs

$ 35,434 Black-Scholes-Merton model Discount rate 19.2 %

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Equity volatility 92.0 %

September 30, 2022

Fair Value (in thousands)

Valuation Technique Unobservable Inputs

$ 33,000 Black-Scholes-Merton model Discount rate 22.4 %

Risk-free rate 4.0 %

Equity volatility 92.5 %

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The above significant unobservable inputs are subject to change based on changes in economic and market conditions.

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It is not possible for us to predict the effect of future economic or market conditions on our estimated fair values.

During the fiscal year ended September 30, 2022, we sold our remaining equity securities of approximately 467.5 thousand shares in Schlumberger, Ltd.

and received proceeds of approximately $ 22.0 million.

For the fiscal year ended September 30, 2022, we recorded a total gain of $ 8.2 million related to this investment, which included a $ 0.5 million gain recognized upon the sale of our investment and a $ 7.7 million gain as a result of the change in fair value of the investment during the period.

This activity is reported in Gain (Loss) on Investment Securities in our Consolidated Statements of Operations.

This investment was classified as Level 1 and based on the quoted stock price.

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Contingent Consideration

Other financial instruments measured using Level 3 unobservable inputs primarily consist of potential earnout payments associated with our business acquisitions in fiscal year 2019 and certain consulting services.

Contingent consideration is recorded in Accrued Liabilities and Other Noncurrent Liabilities on the Consolidated Balance Sheets based on the expected timing of milestone achievements.

The following table reconciles changes in the fair value of our Level 3 liabilities for the periods presented below:

The following table reconciles changes in the fair value of our Level 3 assets for the periods presented below:

September 30,

(in thousands) 2023 2022

Liabilities at beginning of period $ 2,996 $ 9,123

Additions 1,500 —

Total gains or losses:

Included in earnings ( 224 ) 1,123

Settlements 1

( 250 ) ( 7,250 )

Liabilities at end of period $ 4,022 $ 2,996

(1) Settlements represent earnout payments that have been paid or earned during the period.

Assets at beginning of period $ 33,565 $ 500

Purchases 2,122 36,065

Accrued interest 1

Transfers in/(out) 2

Assets at end of period $ 37,440 $ 33,565

(1) During the fiscal year ended September 30, 2023, our convertible note agreement with Galileo was amended to include any interest which has accrued but not yet compounded or issued as a funding note.

As a result, we have included accrued interest in our total investment balance.

(2) This represents the conversion from debt to equity securities on the Consolidated Balance Sheets as of September 30, 2022.

(3) During the fiscal year ended September 30, 2023, we recorded an allowance for credit loss related to one of our geothermal debt securities as the balance is deemed to be uncollectible.

Nonrecurring Fair Value Measurements

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Further details on any changes in valuation of these assets is provided in their respective footnotes.

Other Equity Securities

We also hold various other equity securities without readily determinable fair values.

These equity securities are measured at cost, less any impairments, and recorded within Investments on our Consolidated Balance Sheets.

As of September 30, 2022 and 2021, the aggregate balance of these equity securities was $ 23.7 million and $ 2.9 million, respectively.

During the fiscal year ended September 30, 2022 and 2021, we did not record any impairments on these investments.

Equity Securities

We also hold various other equity securities without readily determinable fair values, primarily comprised of geothermal investments.

These equity securities are initially measured at cost, less any impairments, and will be marked to fair value once observable changes in identical or similar investments from the same issuer occur.

All of our long-term equity securities are measured using Level 3 unobservable inputs based on the absence of market activity.

The following table reconciles changes in the balance of our equity securities, without readily determinable fair values, for the periods presented below:

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Purchases 4,487 15,177

Transfers in 1

Transfers in/(out) 1

Unrealized gain included in earnings — 2,703

Assets at end of period $ 28,232 $ 23,745

(1) Conversion from debt to equity security

Geothermal Investments

As of September 30, 2022 and 2021 the aggregate balance of our debt and equity security investments in geothermal energy was $ 23.7 million and $ 2.7 million, respectively.

All of our geothermal investments are considered a Level 3 input based on the absence of market activity.

These investments include assets measured on both a recurring and nonrecurring basis (discussed in the subsections above).

(1) This represents the conversion from debt to equity securities on the Consolidated Balance Sheets as of September 30, 2022.

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Contingent Consideration

Other financial instruments measured using Level 3 unobservable inputs primarily consist of potential earnout payments associated with our business acquisitions in fiscal year 2019.

Contingent consideration is recorded in Accrued liabilities and Other noncurrent liabilities on the Consolidated Balance Sheets based on the expected timing of milestone achievements.

The following table reconciles changes in the fair value of our Level 3 liabilities for the periods presented below:

(in thousands) 2023 2022

Liabilities at beginning of period $ 4,022 $ 2,996

Additions 500 1,500

Total gains or losses:

Included in earnings 7,808 ( 224 )

Settlements 1

( 2,875 ) ( 250 )

Liabilities at end of period $ 9,455 $ 4,022

(1) Settlements represent earnout payments that have been paid or earned during the period.

Other Financial Instruments

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The carrying value of accounts receivable, other current and noncurrent assets, accounts payable, accrued liabilities and other liabilities approximated fair value at September 30, 2023 and 2022.

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The following information presents the supplemental fair value information for our current and long-term fixed-rate debt at September 30, 2022 and 2021:

The following information presents the supplemental fair value information for our long-term fixed-rate debt at September 30, 2023 and 2022:

September 30,

(in millions) 2023 2022

Current portion of long-term debt, net 1

Carrying value $ — $ 483.5

Fair value — 541.6

Long-term debt, net

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Fair value 435.5 430.7

(1) On October 27, 2021 we redeemed the outstanding 2025 Notes.

See Note 7—Debt to our Consolidated Financial Statements.

The fair values of the current and long-term fixed-rate debt is based on broker quotes at September 30, 2022 and 2021.

The fair values of the long-term fixed-rate debt is based on broker quotes at September 30, 2023 and 2022.

The notes are classified within Level 2 of the fair value hierarchy as they are not actively traded in markets.

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Employee Retirement Plan (“Pension Plan”) to close the Pension Plan to new participants effective October 1, 2003, and reduce benefit accruals for current participants through September 30, 2006, at which time benefit accruals were discontinued and the Pension Plan was frozen.

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The following table provides a reconciliation of the changes in the pension benefit obligations and fair value of Pension Plan assets over the two-year period ended September 30, 2023 and a statement of the funded status as of September 30, 2023 and 2022:

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Interest cost 3,086 2,537

Actuarial (gain) loss ( 16,260 ) 7,111

Actuarial gain ( 4,940 ) ( 16,260 )

Benefits paid ( 3,963 ) ( 36,166 )

Other — ( 81 )

Projected benefit obligation at end of year $ 54,646 $ 60,463

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The mortality table issued by the Society of Actuaries in October 2021 was used for the September 30, 2023 pension calculation.

The amounts recognized in the Consolidated Balance Sheets at September 30, 2022 and 2021 are as follows:

September 30,

(in thousands) 2022 2021

Accrued liabilities $ — $ —

Noncurrent liabilities-other ( 18,699 ) ( 23,097 )

Net amount recognized $ ( 18,699 ) $ ( 23,097 )

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The amounts recognized in Accumulated Other Comprehensive Income (Loss) at September 30, 2022 and 2021, and not yet reflected in net periodic benefit cost, are as follows:

September 30,

(in thousands) 2022 2021

Net actuarial loss $ 15,703 $ 26,268

The net pension liability at September 30, 2023 and 2022 was $ 10.9 million and $ 18.7 million, respectively.

Theses liabilities are recorded within other noncurrent liabilities in our Consolidated Balance Sheets.

The net actuarial loss recognized in Accumulated other comprehensive income (loss) at September 30, 2023 and 2022, and not yet reflected in net periodic benefit cost, was $ 10.4 million and $ 15.7 million respectively.

Unrecognized actuarial gains/losses outside of a corridor of the greater of:

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Expected return on plan assets 4.50 % 4.25 % 3.50 %

We made a voluntary contribution of $ 5.0 million in both fiscal year 2022 and fiscal year 2021.

We made a voluntary contribution of $ 5.0 million during each fiscal year 2023, 2022, and 2021.

In fiscal year 2024, we do not expect minimum contributions required by law to be needed.

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(1) The Company uses the fair value of plan assets in determining the expected return on plan assets.

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We record settlement expense when benefit payments exceed the total annual interest costs.

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The Pension Plan does not directly hold securities of the Company.

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The expected long-term rate of return on Pension Plan assets is based on historical and projected rates of return for current and planned asset classes in the Pension Plan’s investment portfolio after analyzing historical experience and future expectations of the return and volatility of various asset classes.

18 unchanged sentences

Total $ 43,780 $ 43,756 $ — $ 24

2023 FORM 10-K | 93

September 30, 2022

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Bond funds 29,093 29,093 — —

Balanced funds 17,520 17,520 — —

International stock funds 4,739 4,739 — —

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The annual expense incurred for this defined contribution plan was $ 25.8 million, $ 24.8 million and $ 13.6 million in fiscal years 2023, 2022 and 2021, respectively.

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NOTE 14 SUPPLEMENTAL BALANCE SHEET INFORMATION

The following reflects the activity in our reserve for expected credit losses on trade receivables for fiscal years 2023, 2022 and 2021:

September 30,

Year Ended September 30,

(in thousands) 2023 2022 2021

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Accounts receivable, prepaid expenses and other current assets, net, accrued liabilities and noncurrent liabilities —other at September 30, 2023 and 2022 consist of the following:

September 30,

Year Ended September 30,

(in thousands) 2023 2022

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Accrued demobilization, net 6,560 6,319

Prepaid operating expenses — 17,959

Prepaid equipment 21,821 10,091

Insurance Recoverable 28,129 9,684

Other 2,039 8,103

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Deferred income 23,441 19,821

Advance payment for sale of property, plant and equipment — 86,524

Deferred mobilization revenue 10,247 8,959

Accrued income taxes 24,495 40,833

Contingent liability 2,750 5,985

Contingent consideration 9,455 2,750

Operating lease liability 13,772 12,382

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Operating lease liability 41,038 27,350

Payroll tax deferral 1

Other 487 1,917

Total noncurrent liabilities — other $ 128,129 $ 114,927

(1) Deferral related to the provisions within the Coronavirus Aid, Relief, and Economic Security Act, enacted on March 27, 2020, which allows for the deferral of the employer share of Social Security tax.

NOTE 15 COMMITMENTS AND CONTINGENCIES

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The estate of the victim, his widow and children subsequently brought a lawsuit against the employee and HPIDC in Texas State District Court in January 2020.

In February 2022, trial began in the matter and the jury reached a verdict against HPIDC and our employee for approximately $ 126.0 million, including interest.

In March 2022, the court entered a judgment consistent with the findings of the jury.

In April 2022, the Company and its insurers filed post-trial motions, none of which were granted by the trial judge.

However, on June 23, 2022, Plaintiffs' counsel filed a Voluntary Remittitur with the trial court, which formally reduced the verdict to $ 60.0 million.

The Company and its insurers are currently filing motions to appeal the judgement.

Accordingly, the Company cannot make an estimate of the possible loss at this time.

As of September 30, 2022, we have incurred expenses, mainly legal fees, against the insurance deductible.

At this time, we believe our insurance policies will be responsive to the amounts over our $ 3.0 million insurance deductible and that foreseeable exposures to the Company exceeding the deductible will be recovered through insurance.

Accordingly, we do not believe this exposure will exceed our insurance coverage limits.

In July 2023, the Plaintiff and our insurer agreed on a settlement of $ 19.5 million.

This amount is within our insurance coverage limits, thus we did not incur expenses in excess of our $ 3.0 million deductible.

The Company and its subsidiaries are parties to various other pending legal actions arising in the ordinary course of our business.

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We are a performance-driven drilling solutions and technologies company based in Tulsa, Oklahoma with operations in all major U.S.

onshore oil and gas producing basins as well as South America and the Middle East.

onshore oil and gas producing basins as well as South America, the Middle East and Australia.

Our drilling operations consist mainly of contracting Company-owned drilling equipment primarily to large oil and gas exploration companies.

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Segment Performance

We evaluate segment performance based on income or loss from continuing operations (segment operating income (loss)) before income taxes which includes:

We evaluate segment performance based on income or loss before income taxes which includes:

• Revenues from external and internal customers

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• Restructuring charges

but excludes gain on reimbursement of drilling equipment, other (gain) loss on sale of assets, and corporate selling, general and administrative costs, corporate depreciation, and corporate restructuring charges.

but excludes gain on reimbursement of drilling equipment, other (gain) loss on sale of assets, corporate selling, general and administrative costs, corporate depreciation, and corporate restructuring charges.

General and administrative costs are allocated to the segments based primarily on specific identification and, to the extent that such identification is not practical, other methods may be used which we believe to be a reasonable reflection of the utilization of services provided.

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Depreciation and amortization 375,250 9,175 4,156 1,701 — 390,282

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September 30, 2021

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Depreciation and amortization 392,415 10,557 2,013 1,426 — 406,411

The following table reconciles segment operating income (loss) per the tables above to income (loss) from continuing operations before income taxes as reported on the Consolidated Statements of Operations:

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The following table reconciles segment operating income (loss) per the tables above to income (loss) before income taxes as reported on the Consolidated Statements of Operations:

Year Ended September 30,

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Corporate selling, general and administrative costs, corporate depreciation and corporate restructuring charges ( 146,197 ) ( 140,850 ) ( 126,097 )

Operating income (loss) from continuing operations 45,292 ( 428,549 ) ( 620,187 )

Operating income (loss) 561,889 45,292 ( 428,549 )

Other income (expense)

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Interest expense ( 17,283 ) ( 19,203 ) ( 23,955 )

Gain (loss) on investment securities 57,937 6,727 ( 8,720 )

Gain on sale of subsidiary — — 14,963

Gain on investment securities 11,299 57,937 6,727

Loss on extinguishment of debt — ( 60,083 ) —

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Total unallocated amounts 31,490 ( 13,973 ) ( 1,322 )

Income (loss) from continuing operations before income taxes $ 30,918 $ ( 441,180 ) $ ( 636,498 )

Income (loss) before income taxes $ 593,379 $ 31,319 $ ( 429,871 )

The following table reconciles segment total assets to total assets as reported on the Consolidated Balance Sheets:

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Investments and corporate operations 427,001 416,435

Total assets from continuing operations $ 4,355,531 $ 5,034,128

Total assets $ 4,381,956 $ 4,355,531

(1) Assets by segment exclude investments in subsidiaries and intersegment activity.

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The following table presents revenues from external customers by country based on the location of service provided:

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Argentina 137,420 91,385 27,855

Colombia 46,720 22,003 1,674

Bahrain 15,401 16,986 27,435

United Arab Emirates 9,716 5,698 957

Colombia 22,003 1,674 6,414

Australia 3,350 — —

Other foreign 3,197 2,846 2,417

Total $ 2,872,421 $ 2,058,944 $ 1,218,568

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The following table presents property, plant and equipment by country based on the location of service provided:

5 unchanged sentences

Colombia 20,835 21,809

Australia 10,673 —

United Arab Emirates 10,373 3,024

Other foreign 8,939 9,042

Total $ 2,921,695 $ 2,960,809

NOTE 18 RESTRUCTURING CHARGES

During the second quarter of fiscal year 2021, we reorganized our IT operations and moved select IT functions to a managed service provider.

Costs incurred as of September 30, 2021 in connection with the restructuring are primarily comprised of one-time severance benefits to employees who were involuntarily terminated.

During the third quarter of fiscal year 2021, we commenced a voluntary separation program at our local office in Argentina for which we incurred severance charges for employees who were voluntarily terminated.

Additionally, during fiscal year 2021, we continued to take measures to lower our cost structure based on activity levels.

During fiscal year 2021, we incurred one-time moving related expenses primarily due to the downsizing and relocation of our Houston assembly facility and various storage yards used for idle rigs.

These charges are included in other restructuring expenses within the table below.

The following table summarizes the Company's restructuring charges incurred during the year ended September 30, 2021:

Year Ended September 30, 2021

(in thousands) North America Solutions International Solutions Corporate Total

Employee termination benefits $ 54 $ 207 $ 1,215 $ 1,476

Other restructuring expenses 3,815 — 635 $ 4,450

Total restructuring charges $ 3,869 207 $ 1,850 $ 5,926

Beginning in the third quarter of fiscal year 2020, we implemented cost controls and began evaluating further measures to respond to the combination of weakened commodity prices, uncertainties related to the COVID-19 pandemic, and the resulting market volatility.

We restructured our operations to accommodate scale during an industry downturn and to re-organize our operations to align to new marketing and management strategies.

We commenced a number of restructuring efforts as a result of this evaluation, which included, among other things, a reduction in our capital allocation plans, changes to our organizational structure, and a reduction of staffing levels.

Costs incurred during the fiscal year ended September 30, 2020 in connection with the restructuring were primarily comprised of severance benefits to employees who were voluntarily or involuntarily terminated, benefits related to forfeitures and costs related to modification of stock-based compensation awards.

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The following table summarizes the Company's restructuring charges incurred during the year ended September 30, 2020:

Year Ended September 30, 2020

(in thousands) North America Solutions Offshore Gulf of Mexico International Solutions Other Corporate G&A Total

Employee termination benefits $ 10,041 $ 1,432 $ 2,991 $ 321 $ 4,745 $ 19,530

Stock-based compensation benefit ( 3,036 ) ( 178 ) ( 11 ) ( 61 ) ( 197 ) ( 3,483 )

Total restructuring charges $ 7,005 $ 1,254 $ 2,980 $ 260 $ 4,548 $ 16,047

These expenses are recorded within restructuring charges on our Consolidated Statements of Operations for the fiscal years ended September 30, 2021 and 2020.

NOTE 17 SUBSEQUENT EVENTS

As part of our commitment to return cash to shareholders, on October 17, 2022, the Board of Directors of the Company declared a quarterly cash supplemental dividend of $ 0.235 per share on the Company’s common stock, payable on December 1, 2022, to stockholders of record at the close of business on November 15, 2022.

On October 17, 2023, the Board of Directors of the Company declared a quarterly cash supplemental dividend of $ 0.17 per share on the Company’s common stock, payable on December 4, 2023, to stockholders of record at the close of business on November 20, 2023.

The payable date and record date of this supplemental dividend coincides with the dates applicable to the Company’s base dividend of $ 0.25 per share, which was declared on September 6, 2023.

In October 2022, we purchased a $ 14.1 million equity investment, representing approximately 106 million shares, in Tamboran Resources Limited ("Tamboran").

Tamboran's shares are listed and publicly traded on the Australian Securities Exchange.

Additionally, during September 2022, we entered into a fixed-term drilling services agreement with Tamboran.

The expected $ 30.3 million of revenue to be earned over the term of the contract is included within our contract backlog as of September 30, 2022, as mobilization is expected to commence in fiscal year 2023.

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1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data